Azer­bai­jan’s near-term growth prospects are fa­vor­able: IMF

The Pak Banker - - Front Page -


An In­ter­na­tional Mon­e­tary Fund (IMF) staff mis­sion, headed by Raja Al­mar­zoqi, vis­ited Baku dur­ing Novem­ber 8-20, 2012 to dis­cuss re­cent eco­nomic de­vel­op­ments, government poli­cies and fu­ture prospects for the Azer­bai­jani econ­omy.1 The dis­cus­sions also paved the ground for the next Ar­ti­cle IV Con­sul­ta­tion mis­sion, ten­ta­tively sched­uled for late Fe­bru­ary 2013.

The IMF team met with se­nior government of­fi­cials and rep­re­sen­ta­tives of the pri­vate sec­tor, civil so­ci­ety and the diplo­matic com­mu­nity. The mis­sion thanks the au­thor­i­ties for their hos­pi­tal­ity and the con­struc­tive dis­cus­sions. The IMF mis­sion said the near-term growth prospects are gen­er­ally fa­vor­able. Non-oil growth, al­ready at po­ten­tial by end–year, could reach 10 per­cent in 2012 and re­main strong at about 8 per­cent in 2013. Non-oil out­put pri­mar­ily driven by the con­struc­tion and ser­vices sec­tors has be­come con­sid­er­ably de­pen­dent on pub­lic spend­ing.

In­fla­tion has fallen to record lev­els but could rise with planned pub­lic spend­ing and non-oil out­put be­gin­ning to ex­ceed po­ten­tial. 12-month in­fla­tion has de­clined sharply since end-2011 mainly driven by a fall in global food prices.

Re­vis­ing the 2013 bud­get to em­bark on a fis­cal con­sol­i­da­tion path would con­tain risks to macroe­co­nomic sta­bil­ity and strengthen the pol­icy buf­fer to face a po­ten­tial de­te­ri­o­ra­tion in the global econ­omy. The 2013 bud­get bill im­plies an in­crease in the non-oil deficit and higher re­liance on oil rev­enue. With out­put reach­ing po­ten­tial, the mis­sion rec­om­mends to take a more cau­tious ap­proach on the oil-fi­nanced domestic spend­ing by low­er­ing the 2013 non-oil deficit to about 40 per­cent of non-oil GDP.

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