Azernews.Az

An expert of the US Agency for International Development (USAID) has warned against the impact of oil revenues on the Azerbaijani economy.
"There is one way the Dutch syndrome spreads. Do not bring petrodollars to Azerbaijan," the agency's chief economic advisor Arnold Harberger said on a visit to Baku on Friday.
He told a news conference that the influx of petrodollars to the country causes depreciation of foreign currency, which leads to inefficient use of natural resources. Keeping the funds in overseas banks instead could bring both additional income to Azerbaijan and save the country from tremendous risks.
The expert said the funds kept abroad should be brought to the country only if they are spent on the implementation of economically viable projects. These proceeds should be invested only in projects whose return on investment is at least 22%.
Harberger said another reason for increasing inflation is the recent denomination of the national currency, but the problem will be resolved in a few years.
"The national currency has changed in Azerbaijan. But this inflation can be managed, and I believe the government will fully take it under control in the next two to three years," Harberger said.
The government says that inflation will make up about 16% by the year-end but has pledged to reduce the figure in 2008.
Harberger is expected to study economic situation in the country and projects being implemented by USAID during his two-week-long visit.
The USAID expert said he regularly visits developing countries to assist their governments in properly pursuing monetary and fiscal policy, and developing public investment planning strategy.
"I do not have that much information about Azerbaijan and its economy, but I am aware of the country's rapid development and significant economic growth. As an economist, it is my duty to advise the Azerbaijani government on ways of pursuing successful economic policy," he said.
Professor Harberger is a leading international expert on economic development and consults widely with international organizations and with countries in Central America, Latin America, the Middle East and Asia. His expertise on such matters as inflation control and real exchange rate management has been critical to the solution of macroeconomic problems in a wide range of developing countries. Harberger has served as a consultant to 16 foreign governments, nine US government agencies, eight international agencies and foundations, including the International Monetary Fund, Asian Development Bank and Organization of American States, and 13 international corporations.