Azerbaijan Should Increase Public Utilities Tariff Collection: International Monitory Fund

Business Materials 27 September 2007 15:44 (UTC +04:00)

Azerbaijan, Baku / Trend cor. А.Badalova / Growth of expenditures of the state budget of Azerbaijan in 2008 and exchange rate flexibility of monetary fund may lead to decrease of inflation from 16% in the next year, is stated in the report of the International Monitory Fund (IMF).

IMF announced the report concerning results of the visit of the staff team from the Middle East and Central Asia Department led by Vitali Kramarenko to Baku on August 30-September 6, 2007.

A large increase in oil production is expected to maintain real GDP growth at about 30 percent in 2007 and 23 percent in 2008, and to further strengthen the external position.

Non-oil real GDP growth, excluding oil and gas transportation, is projected to decelerate to 40 percent in 2007 and 36 percent in 2008, in part reflecting a further real effective exchange rate appreciation that is expected to occur mainly on account of the fiscal expansion undertaken in recent years.

From a longer-term perspective, the reduction in the non-oil primary fiscal deficit to 36 percent of non-oil GDP in 2008 is warranted by fiscal sustainability considerations, and it would need to be further reduced to about 20 percent of non-oil GDP by 2012 to conform to the long-term oil revenue management strategy.

The government will be able to continue its program of poverty reduction and economic modernization without overstretching its implementation capacity. The primary variant of the budget 2008 has been directed to reduction of increased expenditures. Decrease is explained by cancellation of energy subsidies.

The government should strengthen public utilities tariffs collection from consumers and to provide tax payments by public utilities and energy companies.