A staff team of the IMF led by Raja Almarzoqi visited Baku on October 21-27 to asses macroeconomic developments and prepare for the Article Four consultation mission in June 2015.
Almarzoqi said in a statement following the visit:
"Economic activity has been resilient to regional turmoil in light of limited economic links with Russia. GDP growth is projected at 4 percent in 2014 and 3.5 percent in 2015, with a modest decline in oil output and a slowdown in non-oil growth associated with fiscal prudence and necessary macro prudential tightening. Inflation is projected to hover around 3 percent. Risks arising from low oil prices are mitigated in the short term by reserve buffers.
"The mission encourages the authorities to build upon recent progress toward fiscal sustainability by maintaining fiscal consolidation in the 2015 budget. While the budget oil price assumption of 90 dollars per barrel is prudent, expenditure commitments arising from international events limit fiscal space. Further adverse oil price developments would warrant consideration of reduction in spending. Nevertheless, the budget should be able to accommodate expenditures that will boost the geographical of gas exports. Completion of the public expenditure and financial accountability assessment update will prove the way for improving public spending efficiency.
"The exchange rate remains the anchor of monetary policy, supported by ample reserves. A gradual move towards arch age rate flexibility would forster financial market development. Further moderating growth in consumer lending, finalizing ongoing bank capitalization, and restructuring the international Bank of Azerbaijan will reduce financial sector vulnerabilities.
"Improving the business climate is crucial for diversification and necessary for replacement of public investment by market-based private investment. Priorities are tackling competition and trade barriers, as well as broadening the coverage of anti corruption programs.
"Concerted effort to strengthen macroeconomic statistics, supported by IMF technical assistance, would help policy markets and investors to make better-informed decisions."
Bakudaily.Az
