Azerbaijan, Baku / corr Trend A.Badalova, I.Khalilova / The Asian Development Bank (ADB) has updated its forecast on the payment balance in its Asian Development Outlook 2007 (ADO 2007) Report for 6 of 7 Central Asian countries (except Tajikistan), ADB reports.
The update revises marginally upward the subregion's projected current account surplus for 2007 to 3.5% from 3.2%. Export growth in the main hydrocarbon-exporting countries ( Azerbaijan, Kazakhstan, and Turkmenistan) was strong in the first half of 2007.
Surplus of the current account of the payment balance was directed from 24.6% of GDP to 24.8% in 2008, in 2007 it was left without changes at the level of 25%.
Azerbaijan and Kazakhstan have made significant progress toward transparent management of oil revenues. For example, both countries have already joined the Extractive Industries Transparency Initiative. However, there is still much room for improving oil revenue management, in terms of governance, transparency, integration with the overall fiscal framework and asset management.
Setting up an oil fund by itself does not guarantee either fiscal discipline or commitment to future savings. Only when oil revenues are managed as an integral part of a sound overall fiscal framework, can an oil fund attain its objectives.
The governments in resource-rich Asian countries need to find the right balance between fulfilling development needs (by spending oil revenue), maintaining macroeconomic stability (by stabilizing the impact of oil revenues) and saving part of oil wealth for future generations (by saving oil revenues). Policy makers need to pay close attention to the effects of higher public spending on the real exchange rate and on macroeconomic stability, and should make the best strategic use of windfall revenues for achieving long-term development goals.