Azerbaijan weathered but is still affected by crisis: IMF
Azerbaijan has endured the world economic crisis well but has not
managed to ward it off completely, says Nienke Oomes, who heads an
International Monetary Fund (IMF) mission visiting Baku.
Addressing a news conference Wednesday, Oomes said the country’s Gross Domestic Product grew 9.3% in 2009, which "produces a good impression at first glance." However, non-oil sector growth dwindled to 3% from the 2008 level of 16%, which is bad news.
The mission head said the impact of the global recession on Azerbaijan was mostly seen in plummeting crude prices and a reduction in the demand both in the domestic and overseas markets. Budget revenues therefore decreased by around 30%.
Oomes noted that the crisis has also adversely affected the country’s financial sector. Thus, commercial banks scaled down lending to the private sector, and a number of state-run enterprises faced a shortage of re-financing.
She said that despite challenges, however, Azerbaijan successfully took steps to ward off the economic downturn. In light of decreased budget revenues, the government reduced non-priority expenses, and only the ongoing substantial investment projects were financed. Also, the Azerbaijan Central Bank succeeded in maintaining financial stability by keeping the national currency rate stable and ensuring liquidity in the banking sector. The stable rate of the manat reduced inflation and countered the trend of an increasing rate of the dollar, the IMF executive concluded.
Oomes said that during discussions held in Azerbaijan, the IMF mission made a number of suggestions to the government, including upgrading the taxation and customs systems by supporting the development of trade. Also, the fund’s experts believe that private sector growth should be stimulated by minimizing monopolization.
Oomes said that, since the oil sector will gradually cease to be the main source of revenues for the country, diversification of the economy should be expedited. The IMF therefore suggested that the government develop a non-oil sector export strategy and continue working toward Azerbaijan’s admission to the World Trade Organization (WTO).
The IMF predicts 2.7% GDP growth in Azerbaijan in 2010. The country’s oil production is expected to increase 1.3% this year, while non-oil sector economy is projected to grow by 4.2%, compared to the 3% figure reported in 2009, according to Oomes.
However, this growth entails some risks, Oomes continued. She said that if businessmen remain pessimistic or if external demand does not grow significantly, the growth rate might be below projected levels.
The IMF executive added that the fund expects inflation to be 4% in Azerbaijan in 2010.*
Addressing a news conference Wednesday, Oomes said the country’s Gross Domestic Product grew 9.3% in 2009, which "produces a good impression at first glance." However, non-oil sector growth dwindled to 3% from the 2008 level of 16%, which is bad news.
The mission head said the impact of the global recession on Azerbaijan was mostly seen in plummeting crude prices and a reduction in the demand both in the domestic and overseas markets. Budget revenues therefore decreased by around 30%.
Oomes noted that the crisis has also adversely affected the country’s financial sector. Thus, commercial banks scaled down lending to the private sector, and a number of state-run enterprises faced a shortage of re-financing.
She said that despite challenges, however, Azerbaijan successfully took steps to ward off the economic downturn. In light of decreased budget revenues, the government reduced non-priority expenses, and only the ongoing substantial investment projects were financed. Also, the Azerbaijan Central Bank succeeded in maintaining financial stability by keeping the national currency rate stable and ensuring liquidity in the banking sector. The stable rate of the manat reduced inflation and countered the trend of an increasing rate of the dollar, the IMF executive concluded.
Oomes said that during discussions held in Azerbaijan, the IMF mission made a number of suggestions to the government, including upgrading the taxation and customs systems by supporting the development of trade. Also, the fund’s experts believe that private sector growth should be stimulated by minimizing monopolization.
Oomes said that, since the oil sector will gradually cease to be the main source of revenues for the country, diversification of the economy should be expedited. The IMF therefore suggested that the government develop a non-oil sector export strategy and continue working toward Azerbaijan’s admission to the World Trade Organization (WTO).
The IMF predicts 2.7% GDP growth in Azerbaijan in 2010. The country’s oil production is expected to increase 1.3% this year, while non-oil sector economy is projected to grow by 4.2%, compared to the 3% figure reported in 2009, according to Oomes.
However, this growth entails some risks, Oomes continued. She said that if businessmen remain pessimistic or if external demand does not grow significantly, the growth rate might be below projected levels.
The IMF executive added that the fund expects inflation to be 4% in Azerbaijan in 2010.*
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