Statement at the End of an Article IV Mission to Azerbaijan

Press Release No.14/107
March 18, 2014

An International Monetary Fund (IMF) mission lead by Raja Almarzoqi visited Baku during March 4-17, 2014 to conduct 2014 Article IV consultation discussions. The team met with the Minister of Finance, Chairman of the Central Bank of Azerbaijan (CBA), other high level senior officials, and representatives of the private sector, civil society, and the diplomatic community

At the conclusion of the visit, Mr. Almarzoqi issued the following statement:

“The success of the government’s debut Eurobond amid market turbulence in the region is a testimony of investors’ confidence in Azerbaijan’s prudent management of the oil windfall. The key challenge ahead is reducing the oil dependence, while fostering a diversified private sector-led growth.

“The near-term economic prospects for 2014-15 are favorable, with growth of non-oil gross domestic product at around 8 percent and inflation stable at a low single digit level. A fall in oil prices with a potential deterioration in the global outlook and key emerging markets is the main risk.

“The fiscal policy tightening envisaged in the approved 2014 budget is welcome and should be followed by a decisive medium-term fiscal consolidation strategy. This would free up resources for private investment, thereby helping to diversify the economy away from oil dependency.

“The intention of the Central Bank of Azerbaijan (CBA) to keep monetary policy in a neutral stance is well placed, as are its initiatives to slow the growth in consumer loans. Yet these measures should be monitored closely. Recent measures taken by the CBA to strengthen financial regulations will help ensure financial stability, but further actions are needed to increase the resilience of the system and competition in interest margins.

 “Actions to strengthen the rule of law (independence of the judicial system) and broaden anti-corruption efforts, along with a new competition code that eliminates formal protection for certain business, would help create a competitive private sector-led non-oil economy.

“The mission thanks the authorities for the open and constructive discussions.”


Azerbaijan: Selected Economic and Financial Indicators, 2010–15
 
   

 

 

 

 

 

  2010 2011 2012 2013 2014 2015
      Prel. Proj Proi, Proi,
 
 

 

 

 

 

 

 

National income

           

GDP at constant prices

5.0 0.1 2.2 5.8 5.0 4.6

Of which: Oil sector 1/

5.0 -9.8 -5.3 0.5 -0.1 -0.1

Non-oil sector 2/

7.6 9.4 9.6 9.9 8.3 7.5

Consumer price index (end of period)

7.9 5.6 -0.3 3.6 3.4 4.5

Consumer price index (period average)

5.7 7.9 1.0 2.4 3.5 4.0

Money and credit

           

Net foreign assets

34.6 68.7 5.6 19.9 16.4 3.4

Net domestic assets

13.5 2.8 40.3 8.7 13.8 38.2

Domestic credit

8.4 7.9 39.6 4.3 10.8 15.4

Of which: Credit to private sector

6.6 18.1 20.8 27.6 10.3 15.1

Manat base money

31.6 29.4 27.1 10.7 12.7 9.5

Manat broad money

34.8 32.5 25.5 19.0 14.7 14.1

Total broad money

21.9 32.1 20.6 15.4 13.9 20.0

Foreign currency deposits ratio to broad money

21.2 20.9 17.7 15.1 14.5 13.2

Velocity of total broad money (M3) 3/

2.8 2.6 2.3 2.3 2.3 2.3

External sector (in US$)

           

Exports f.o.b.

25.5 30.3 -5.4 -1.0 -1.9 -5.8

Of which: Oil sector

25.7 30.9 -6.7 -1.0 -1.9 -6.7

Imports f.o.b.

3.6 50.7 3.1 0.2 7.2 8.8

Of which: Oil sector

19.6 35.5 -5.9 6.8 31.0 32.1

Export volumes

-1.4 -3.3 -6.0 -0.1 -1.9 0.0

Import volumes

-4.0 38.2 6.1 0.9 9.2 9.9

Terms of trade

27.1 30.7 3.6 -0.2 1.8 -4.9

Real effective exchange rate

1.1 2.6 0.8 3.0

Gross investment

18.5 21.2 22.7 23.7 23.2 22.6

Consolidated government

12.5 16.0 16.1 17.3 17.0 16.5

Private sector

6.1 5.1 6.7 6.4 6.3 6.1

Of which: Oil sector

1.9 2.1 3.1 3.0 2.9 2.8

Gross domestic savings

52.5 54.1 50.7 48.2 43.9 37.2

Gross national savings

46.6 47.6 44.5 43.4 38.2 32.5

Consolidated government

27.1 29.7 20.9 18.3 17.3 13.3

Private sector 4/

19.5 18.0 23.6 25.1 21.0 19.2

Consolidated central government finance

           

Overall fiscal balance

14.6 13.3 4.9 1.0 0.3 -3.1

Non-oil primary balance, in percent of non-oil GDP

-36.3 -40.3 -45.4 -45.0 -43.2 -41.8

External sector

           

Current account (- deficit)

28.0 26.5 21.8 19.7 15.0 9.9

Foreign direct investment (net)

0.6 1.4 1.1 -0.9 0.5 1.9

Public and publicly guaranteed external debt outstanding

7.4 7.3 9.2 11.7 14.0 14.2

Memorandum items:

           

Gross official international reserves (in millions of U.S. dollars)

6,721 10,887 11,587 13,987 15,987 16,487

Nominal GDP (in millions of manat)

42,465 51,158 53,968 57,708 61,638 67,473

Nominal non-oil GDP (in millions of manat) 2/

22,243 25,393 29,766 34,051 38,144 42,850

Nominal non-oil GDP (in millions of USD) 2/

27,877 32,286 37,919 43,405 49,614 55,735

Nominal GDP per capita (in U.S. dollars)

5,847 7,106 7,538 8,160 8,823 9,679

Nominal GDP (in millions of U.S. dollars)

52,913 64,819 68,700 73,537 79,363 87,763

Oil Fund Assets (in millions of U.S. dollars)

22,766 29,800 34,058 35,448 37,723 38,484

Population (mid-year, in millions)

9.0 9.1 9.2 9.3 9.3 9.4

Exchange rate (manat/dollar, end of period)

0.798 0.787 0.785 0.785    
 

Sources: Azerbaijani authorities; and IMF staff estimates and projections.

1/ Includes the production and processing of oil and gas.

2/ Includes the transportation of oil and gas (except transportation through the western route),

3/ Defined as gross domestic demand (excluding oil sector-related imports) divided by average broad money.

4/ Historical data includes statistical discrepancy.

5/ IMF staff estimates of the macroeconomic framework consistent with the authorities’ approved budget.



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