IMF forecasts Azerbaijan GDP growth near 4% in near term
BAKU. May 22 (Interfax) - The International Monetary Fund (IMF) forecasts Azerbaijan's GDP growth at around 4% in the near term, the IMF said in a public information notice following Article IV consultations with Azerbaijan.
"Near-term economic prospects are generally positive, though with an increasing risk of overheating and the deepening of fiscal vulnerabilities. Overall GDP growth is expected at around 4% in 2013 and similar levels over the medium term, driven by government spending," the notice says.
The IMF forecasts inflation to reach 7% in 2013 compared with the Central Bank of Azerbaijan's target range of 5%-6%. "Inflation could rise to above 6% over the medium term," the notice says.
"Risks emanate mainly from a fall in oil prices given Azerbaijan's low reliance on non-oil exports. But large foreign assets could provide sufficient buffer to mitigate the impact of future shocks, including a sharp and sustained decline in oil prices," it says.
Azerbaijan's non-oil fiscal deficit amounted to 45% of GDP in 2012 and is forecast to reach 46.9% in 2013 "if the government implements the large public investment program approved in the budget."
GDP growth in 2014 is forecast at 5.8% with a non-oil fiscal deficit of 44.3% of GDP.
"More broadly, Directors encouraged the authorities to revamp the fiscal policy framework in line with recent IMF guidance for resource-rich developing countries. A fiscal rule and strong institutional arrangements consistent with international best practice could strengthen fiscal discipline, particularly at times of high oil prices, boost fiscal sustainability, and promote a sound management of oil revenue," it says, adding that "high oil prices at present offer a good opportunity to adjust the course of economic policies from a position of relative strength."
