Azerbaijan, Baku / corr Trend U. Ismayilova / The expected level of inflation in Azerbaijan for 2008 is to comprise 13%, which is not so dangerous for countries with a developing economy, Azer Amiraslanov, the Deputy Chairman of the Permanent Parliamentary Commission on Economic Policy of Milli Majlis [Azerbaijan Parliament], said on 24 October.
"The level of inflation is not the major problem. It is important to have inflation within a regulated level, which can be achieved through pursuing the right macroeconomic policy," Amiraslanov said.
The Government should approach this in a complex fashion to achieve the resolution of problems related to the rise of inflation so as not to leave aside other problems.
It is necessary to note that foreign factors [rise in world oil prices] are among the factors affecting the increase of inflation within the country, for which we cannot become insured," he stressed.
A rise in oil revenues and a flow of money and currency has given birth to inflation potential. Though the National Bank of Azerbaijan (NBA) carries the intention for consolidating the manat, it creates additional potential for an inflation rise in the country, Amiraslanov said. (Currency intervention is the transaction by the central bank on purchase and sale of national currency for further maintenance of its rate).
Along with the rise in oil prices, a rise in grain prices also promotes inflation. Azerbaijan imports grains mainly from Russia, the Ukraine, and Kazakhstan and the price hike has been observed in almost all of these countries, which affects the increase of consumer prices in Azerbaijan.
Azerbaijan's annual consumption of grains is 3mln t, including 1mln imported.
If in 2008, like in the beginning of 2007, the prices of public utilities and electricity are not increased, single digit inflation is possible, whereas the real forecast for the next year is approximately 13%, Amiraslanov said.
The International Monetary Fund (IMF) forecasts the real increase of the GDP in Azerbaijan to comprise 23.2% as compared to 29.3% in 2007. According to the IMF's forecasts, in 2007 and 2008 the inflation ratio will be 17% in Azerbaijan as compared to 16.6% in 2007.
In 2008 the current payment balance of Azerbaijan is expected to comprise 39.9% of the GDP as compared to 31.4% in 2007.