IMF advises Caucasus, C. Asia countries to reinvigorate reform efforts
BAKU. May 23 (Interfax) - The International Monetary Fund (IMF) said Azerbaijan and other Caucasus and Central Asian (CCA) countries had a favorable near-term economic outlook which provides opportunities for reform.
"The CCA region continued to post solid economic growth in 2012, though, at 5.7%, moderately lower than in previous years. This moderation in growth reflected subdued external demand, a sharp decline in agricultural output in Kazakhstan, and disruptions to gold production in the Kyrgyz Republic," the IMF said in a Regional Economic Outlook Update this week.
"The near-term outlook remains broadly favorable for CCA oil and gas exporters (Azerbaijan, Kazakhstan, Turkmenistan, Uzbekistan), reflecting the region's limited direct exposure to Europe, and continued high oil prices. Growth is projected to be resilient, at an average of 5.8% in 2013 and 6.1% in 2014. Most oil and gas exporters are projected to grow between 5% and 8% in 2013-14, supported by high non-oil growth and, in Kazakhstan, higher oil production. Azerbaijan's growth-still largely sustained by strong non-oil growth-is expected to recover in 2013-14, as oil output is beginning to stabilize."
"Growth in the CCA oil and gas importers (Armenia, Georgia, the Kyrgyz Republic, Tajikistan) is also expected to remain fairly strong at 6% and 5.8% on average respectively in 2013 and 2014. Growth is projected to moderate in Armenia, Tajikistan, and Georgia, but to recover strongly in the Kyrgyz Republic on account of the resumption in gold production."
"Following a solid growth performance in 2012, the near-term outlook remains broadly favorable across the Caucasus and Central Asia, reflecting high oil prices for the oil and gas exporters and strong non-oil commodity prices and robust remittances in the oil and gas importers," the report said.
"Risks to this favorable outlook could stem from still-subdued world demand, domestic political uncertainties, and geopolitical risks in the region. Policymakers, particularly in the oil-importing countries, should take advantage of the favorable outlook to re-establish fiscal policy buffers that were eroded in the aftermath of the global crisis. Across the region, countries should reinvigorate their reform efforts to address longstanding structural issues, with a view to improving governance, building an investor-friendly environment, developing a more inclusive financial system, and fostering regional trade and finance integration," the update said.
"Key medium-term challenges for the region include creating jobs and fostering high, sustained, and inclusive growth. While some CCA countries have made progress toward achieving a business-friendly environment, further efforts toward this end will be needed by all. Countries also need to reinvigorate their efforts to diversify their economies away from natural resources, further improve their infrastructure, reduce the role of the state in the economy, and promote transparency and good governance. Lowering regional trade barriers would also promote greater economic diversification and growth," the IMF said.
"Financial sector reform should aim at enhancing competition and improving access to finance. Reform should include improving regulatory and supervisory frameworks, addressing directed or connected lending, deepening domestic capital markets, improving credit information, and strengthening creditor rights," it said.