Statement at the End of an IMF Staff Visit to AzerbaijanPress Release No.13/452
November 15, 2013
A staff team of the International Monetary Fund (IMF) led by Raja Almarzoqi visited Baku during November 8-15, 2013, to assess macroeconomic developments and pave the ground for the next Article IV Consultation mission in March 2014. The team held discussions with senior government officials and representatives of the private sector and the diplomatic community. At the conclusion of the visit, Mr. Almarzoqi issued the following statement:
“Azerbaijan’s near-term economic prospects are generally favorable, with overall gross domestic product (GDP) growth projected at 5 percent in 2013-14, following the successful stabilization of oil output. Favorable oil sector developments will maintain a comfortable external position. Inflation is projected to hover around 3 percent on the back of softer price pressures. Risks of a fall in oil prices emanate mainly from a potential deterioration in the global outlook.
“The draft 2014 budget signals a welcome start to fiscal consolidation. The planned reduction in the non-oil budget deficit will move the fiscal position toward sustainable levels and open space for private sector activities. The mission encourages the authorities to manage increasing fiscal risks from state activities outside the budget and supports efforts to improve public spending efficiency and reform the pension system.
“The Central Bank of Azerbaijan (CBA) should continue to strengthen the interest rate transmission mechanism and the banking supervision framework, as well as address the strong consumer lending growth. Near-term priorities include strengthening bank asset classification and provisioning rules, and introducing new macro-prudential measures. The capitalization plan of the International Bank of Azerbaijan (IBA) is a serious concern and thus the mission calls for combining this capitalization with the restructuring of this bank in line with internationally accepted practices.
“Further improvements in the business climate will help open up new markets and entail efforts to implement the customs code, finalize World Trade Organization (WTO) accession, ease barriers for competition, and generally improve governance. The new inspection law is welcome and the mission supports the authorities’ plans to exclude the supervision of the banking and insurance sectors from the law’s purview.
“The mission thanks the authorities for their hospitality and the constructive discussions.”