Azernews.Az

BAKU – The projected growth rate of Azerbaijan’s gross domestic product will be 2.8 percent in 2011. Non-oil sector growth will be 6 pct, while the oil sector is not expected to expand considerably, an International Monetary Fund (IMF) mission said in conclusion of its visit to Baku on Tuesday.

The Azerbaijani government forecasts economic growth at 3.8 pct in 2011.

Nadeem Ilahi, who headed the mission, said that inflation is expected to reach 10 pct in Azerbaijan this year, chiefly due to rising food prices in world markets, which could amount to 16 pct.

"Prospects for 2011 are promising, but rising inflation, expected to reach 10 percent by end-2011, pose macroeconomic challenges. The main challenge for policymakers would be to contain inflation expectations, while fiscal policy would also need to contain demand pressures."

Ilahi said further that the sharp rise in global food prices "warrants additional, well-targeted social transfers to the poor", who tend to bear a heavy burden of rising inflation.

Ilahi warned that Azerbaijan's oil sector will cease to grow from 2013-2016. He said the issue was brought up during his discussions with Azerbaijani officials, and the importance of stepping up work on boosting the country’s non-oil economy was stressed.

The IMF official said efforts to ensure medium term fiscal sustainability are warranted, even if the prospects for more hydrocarbon resources materialize. This could be achieved through raising non-oil revenues, making government spending more efficient, and