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The International Monetary Fund (IMF) raised its forecast for Azerbaijan`s economic growth to 7.5 percent from 2.5 percent. The updated forecast is the result of higher oil prices, a fund official said on Thursday, Reuters reported.
``The GDP growth will be positive and will be 7.5 percent this year, which is not a bad indicator when the majority of countries in the world will end this year with a decline,`` said Koba Gvenetadze, the IMF`s representative in Azerbaijan.
The IMF`s previous forecast for the Azeri gross domestic product`s (GDP) growth in 2009 was 2.5 percent, while the government projects growth of 18.9 percent, up from around 11 percent in 2008.
``Taking into account changes in the oil sector, this forecast might be changed as this sector has a very significant role in the Azeri economy,`` he added. Azeri GDP growth averaged 21 percent during the boom period of 2003-2007.
Gvenetadze said the IMF had raised its 1 percent growth forecast for Azerbaijan`s oil sector to 11 percent in 2009. According to analysts` estimates, oil revenues account for up to 60 percent of the budget.
The growth of the Azeri crucial oil sector is also stimulated by the resumption of production at the giant Azeri-Chirag-Gunashli (ACG) deposit, the main source of oil for the BP-operated Baku-Tbilisi-Ceyhan (BTC) pipeline.
Gvenetadze said a rise in oil prices would help Azerbaijan avoid a fiscal deficit. The Azeri budget is calculated with the projected average price of oil in 2009 at $70 per barrel.
``The average annual oil price is expected to be $62 a barrel. That`s why we don`t expect a budget deficit and the balance of payment will be positive,`` he said.
The IMF predicts the GDP to grow by 7.4 percent in 2010, with the oil sector to grow by 10 percent.
Gvenetadze said the country was well placed for curbing inflation, setting annual inflation forecast at 2 percent in 2009 and 5 percent in 2010.
The government projects annual inflation at 2-3 percent this year, significantly down from 20.8 percent in 2008.

Local branch closed
The IMF formally shut its office in Azerbaijan on Friday, becoming the first major financial institution to no longer be represented in the South Caucasus republic.
Officials said the closing is due to the lack of joint financial programs and the need to cut costs. Gvenetadze told reporters that, from now onward, bilateral cooperation will be carried out based on a new model.
``IMF representation in Azerbaijan will be transformed into an office. The Fund considers it unnecessary to have permanent representations in the countries having no credit lines,`` Gvenetadze said.
Two out of the eight employees of the Baku office may stay in the country to deal with issues involving the Fund and the Azerbaijani government.
Azerbaijan joined the IMF in September 1992. The country has received funds worth $363 million, including $248 million in concessional loans, from the Fund. The credits have been allocated in tranches under various economic reform programs. The latest allocation was completed in 2005. Since then, Azerbaijani authorities have turned down IMF lending, saying the country has achieved a high level of financial growth and sought only technical assistance from the organization.
Azerbaijan`s obligations to the IMF currently amount to about $40m.