Azerbaijan, Baku, 17 March /corr. Trend I.Khalilova / The Government of Azerbaijan considers that the increase of budget expenses is the main reason for growth of inflation. Azerbaijan's Minister of Economic Development, Heydar Babayev, said on 17 March that the Public budget is expected to increase by 9 times in the period from 2001 to 2008.
"In such a growth of the budget, the level of inflation at 16% is considered normal and such governable level is not observed in any country," the Minister said.
According to him, the Government could transfer all these oil revenues to the management in order to avoid inflation, but the Country needs a huge investment to develop economy. Today the Country's opportunities allow them to be implemented at the expense of internal funds. Up to now, the gross foreign investments into Azerbaijan's economy totaled $50bln.
Last year the investment allocations at the expense of the Public budget made up AZN 1.9bln and in 2008 this figure is expected to amount to AZN 2.8bln. According to the Minister, modernization of the infrastructure, the communal sector and the implementation of the communal projects requires these expenses to be increased. "We could prevent the accelerated growth rate of inflation through administrative tools, but due to the increase of demand for consumer goods in the country, the flow of the imported commodities has increased," Babayev said. "We cannot influence the decrease of the prices for imported goods. We act in order not to allow artificial price increases. The Government fully controls inflation. The main fact is to understand the reasons for the price increase and combating them is easy," the Minister said.
According to him, due to this, weekly monitoring is held. At the same time, the increase of the index of the consumer prices remains as only a threat for the sustainable economic development in Azerbaijan, the Minister said.
According to the IFO, the prices for imported non-oil products increased by 24%. The inflation as a result of 2007 made up 16.7%, January-February 2008 - 15.7%. The International Monetary Fund considers that inflation, as a result of 2008, will equal at least 20% although the Government hopes to maintain it at 10%.