Discussions of the macro-economic situation for 2006 were the major topic for negotiations within the frames of the current visit of the IMF mission to Azerbaijan. The mission is headed by the vice department head on Central Asia and Middle East, Vitalii Kramarenko. The growth of the oil extraction in the current year assisted to the GNP growth in the first part of this year on 20-30%. The growth in the non-oil sector is at 8, 5- 9, 5% level.
The definite growth of expenditures and implementation of certain support programs may affect the development of the transport sector, which can also positively affect the oil sector, Kramarenko mentioned. However, correcting the budget forecasts on expenditure part may negatively influence the inflation deterrence at the certain level. He believes that the governmental forecast on inflation (to 10%) is not exact considering the growth of expenditures and external factors (change of dollar and EURO course at the world markets, capital purchase).
There are risks of long and short term inflation as government is spending the oil finances. The government should avoid the excessive expenditures, Kramarenko said. Despite the state claims, that the inflation is controlled externally. Besides, government is planning to release the valuable state assets to stop the inflation growth.
If state is not capable to stop the inflation growth this way, there should be additional consultation, Kramarenko concluded.
