IMF improves Azerbaijan's economic growth outlook

/By AzerNews/

By Nigar Orujova

The International Monetary Fund has improved the economic growth outlook of Azerbaijan for 2015, said Raja Al-Marzouqi, a head of IMF mission on Azerbaijan.

Thus, the IMF expects a 1.8 percent GDP growth in Azerbaijan. The IMF expected a 0.6 percent economic growth in the country for 2015 in its April forecast.

He said change of the forecast is linked with the economic growth achieved by Azerbaijan in January and April.

“After the devaluation, we forecasted GDP growth of 0.6 percent, but during our visit to the country we saw that the non-oil sector grew by 6.5 percent in January-April 2015. At the same time we realized that the economic growth will be higher than expected,” he said at the press conference on June 8.

Al-Marzouqi noted that at the end of 2015, the growth of non-oil sector in Azerbaijan is forecasted at 3.5 percent.

"We are expecting that by the end of the year the volume of Azerbaijan's GDP will be about 66 billion manats, while in 2016 - 66.68 billion manats. In addition, we forecast GDP growth to be 2.8 percent in 2016, while the growth of non-oil sector - 4.5 percent," the head of the mission said.

Despite the fact this year the IMF predicted a double-digit inflation in Azerbaijan, the Fund now expects a growth in the consumer price index to be 8.5 percent in 2015 and 6.6 percent in 2016.

Al-Marzouqi noted that decline of the inflation outlook was effected by precautionary measures taken by the Azerbaijani government.

No devaluation expected

A possible drop in world oil prices below $50 per barrel mark will not lead to a repeated devaluation of Azerbaijan’s national currency, Al-Marzouqi went on to add.

This is connected with the fact the Azerbaijani government has laid the price of oil at the level of $50 per barrel in the budget for 2016.

"Now, the government of the country is focused mainly on fighting corruption, improvement of customs procedures and business environment. It is clear the government spending is now reducing, but if the above criteria will be respected, it will lead to economic recovery, and would negate the probability of weakening of the national currency," the head of the mission stressed.

IMF mission to visit Baku in late 2015

The mission of the fund will arrive in Baku to hold annual consultations with the Azerbaijani government on Article IV of the IMF Charter at the beginning of December, the head of the mission added.

"Despite the fact that recently the foreign exchange reserves of the Azerbaijan Central Bank has decreased, now we see that the situation has stabilized. We believe that the government will be able to keep the gold reserves. Advices and recommendations given by the evaluation mission in the framework of Article IV are also contributing to this," he said.

The fund and Azerbaijan are cooperating in the framework of consultations and technical assistance missions in key areas of macroeconomic policy since 2006.

Four missions of the IMF visited Azerbaijan and presented their recommendations to the state bodies of the country during the last year.

These recommendations addressed such areas as public debt management, budget classification, the fight against money laundering and terrorism financing, reforms of the pension system, as well as Article IV of the Agreement of the IMF.

This year, the IMF and the World Bank conducted a second assessment of the financial sector of Azerbaijan.

The IMF opened its office in Baku in 1992, and despite the fact that since 2009 its staff has been reduced, the fund remains an important partner of the government of the country. It should be noted that the cooperation with the IMF played an important part during the global economic and financial crisis.

The fund has provided long-term loans in the amount of 577.3 million dollars to Azerbaijan to support the program of economic reforms in 1995-2005. Azerbaijan has no needs to access the funds of the IMF since 2005.