IMF: Azerbaijan keeps inflation rate under control (UPDATE)
By Aynur Jafarova
Azerbaijan keeps its inflation rate under control, head of the International Monetary Fund (IMF) mission to Azerbaijan said at a press conference on November 15.
Raja Almarzoqi said that according to the IMF forecasts, inflation in Azerbaijan will be below three percent by the end of this year, and three percent in 2014.
"We concluded that economic growth in Azerbaijan is at a normal level. The annual average growth of the economy for the current and the next year is predicted at five percent," Almarzqori said.
Azerbaijani Central Bank forecasts that current inflation is only 2.3 percent and is expected to reach 3.2 percent at the end of 2013.
Almarzqori went on to note that the IMF sees positive signs for starting the consolidation of Azerbaijan's state budget.
"The envisaged adjustment-while slightly weakening non-oil growth next year-will help reduce risks to macroeconomic stability, begin to address medium-term fiscal sustainability, and provide room for private sector activity," Almarzqori said.
Meanwhile, the IMF mission notes the increasing fiscal risks, and encourages the government's efforts to improve the efficiency of expenditures of public funds and reform the pension system in the country.
Almarzqori also said that the further improvement of business climate will help the Azerbaijani entrepreneurs to open new markets, promote Azerbaijan's accession to the World Trade Organization (WTO), remove the obstacles for fair competition, and improve the efficiency of public administration.
The head of the mission went on to say that the IMF is concerned about the capitalization of the International Bank of Azerbaijan without restructuring it.
"We recommend the Azerbaijani government to reconstruct and enlarge the bank by creating an adequate and healthy business model," the head of IMF mission said.
According to Almarzqori, in the current "unhealthy" situation [the merger of the bank without restructuring it] the privatization of the bank is impossible.
"Taking into consideration that the bank holds a significant share in the country's banking market, if any problems occur, this can have an impact on the whole financial system of Azerbaijan," he said.
The IMF mission was in Azerbaijan since November 8. During their visit to Azerbaijan, the IMF's representatives held meetings with officials and entrepreneurs. The mission's next visit to Azerbaijan is expected to take place in March 2014.
Azerbaijan has cooperated with the IMF since September 18, 1992. IMF loans were allocated to Azerbaijan within six programs, but cooperation with the IMF has been at the level of consultation since 2005, as the Azerbaijani government has refused to receive loans from the fund.
Such issues as the development of industry in the country, the privatization of state-owned banks, ensuring the rational use of oil revenues, solving problems with provision of water and energy and the need for reforms in these systems as well as reforms in government and other areas are priorities in the negotiations between Azerbaijan and the IMF.