Azerbaijan May Reach One Digit Rate for Five Years –IMF Mission Head (video)
Azerbaijan, Baku, 13 March / Trend corr. I.Khalilova / The International Monitory Fund (IMF) submitted the scenario to reduce the growth rate of the State expenditure to 27% or 30% to the Azerbaijani Government, Valeria Fikera, head of IMF Mission, stated during the press-conference dedicated to the results of the consultation with the Government on the 4th Agreement.
"We have expressed concern with the growth rate speed of the State expenditure, as this causes inflation rate to increase," Fikera stated. We understand the necessity to increase its expenditures, but the Azerbaijani economy is not yet ready to adopt such proposals."
The Government's intension to expand the expenditure from the State Budget for 2008 for investments, which is explained by the increase of prices for building materials, was discussed during meetings within the respective departments. The demand for additional expenditure is also connected with the increase of pensions. However, as yet the Government's plan to reconsider the budget forecast has not been specified.
Although, the macroeconomic forecast predicts the inflation at a 13% rate, IMF is expected increase the figure. "According to our assessments, the growth rate of inflation in 2008 will not drop less than 20%, if no measures are taken to limit the growth rate of the state expenditures," Fikera said.
Azerbaijan may reach a single-digit rate of inflation within five years only after reconsidering the program of State investments.
The macroeconomic results in Azerbaijan for 2007, as well as the economic policy of Azerbaijan for 2008, were discussed during the mission's visit from 26 February.
The meetings are planned in the Economic Development and Tax Ministries, National Bank of Azerbaijan, State Oil Company of Azerbaijan, State Social Protection Fund, State Statistic Committee, as well as International Bank of Azerbaijan, Micro Financing Bank of Azerbaijan, Bank Standard, Kapital Bank and Azerbaijani Bank Association.
Consultation with the Government on the 4th Article is being held with all IMF member-countries eachyear. The key target is to assess the Government's short-term and mid-term tasks on the prospective development of economy and to discuss the plans on structural reformation. As a result of the visit the mission has developed a report. The document will be submitted to the IMF Executive Directors Council for consideration.
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