Azernews.Az

The International Monetary Fund has offered to reduce Azerbaijan’s budget spending for this year to contain inflation.

The suggestion was made Thursday by Nadeem Ilahi, head of the IMF mission to the country, at a Washington-Baku video conference on the outcomes of IMF consultations with Azerbaijan.

The consultations were held from Oct. 20 to Nov. 2 during the visit of an IMF mission to the country headed by Nadeem Ilahi.

Ilahi said Azerbaijan’s mid-term fiscal policy is dependent on oil. He praised the work of the state oil fund Sofar, which holds the resource-rich South Caucasus republic’s revenues from crude exports, but noted that the windfall of oil revenues should not beef up budgetary expenses.

"Rising budgetary spending and economic growth may cause inflationary pressure. It is for this reason that Azerbaijan should somewhat reduce its budgetary spending," Ilahi said.

Ilahi’s statement suggests that Azerbaijan should begin fulfilling the IMF’s recommendation this year. Azerbaijan could maintain single-digit inflation only if it spends less than the amount envisioned in the 2012 state budget, he said.

According to official estimates, inflation is expected at 6 percent in 2012.

Ilahi added that the inflation level was low in Azerbaijan in 2011 due to low food prices in world markets.