Azerbaijan, Baku / corr. Trend I.Khalilova / A resolution by the Tariff Council of Azerbaijan to increase electricity, gas, water tariffs and public transport fares by 50%, dated 8 January 2007, will give birth to considerable pressure on inflation in 2007, according to the Asian Development Bank (ADB) 2007 Report on "Development of Asia. Growth and Changes". The average official consumer price inflation in 2007 is forecast at 14%.
In 2007 public expenses will increase 42%. Major sections of the public budget expenses, as in 2006, will be implemented for payment of salaries in the public sector and pensions, as well as defense and infrastructure.
The public budget deficit is planned to comprise 1.5% of GDP in 2007. "A major issue for the Azerbaijan Government remains the capacity of the economy to absorb this increase. However, a resolution to cut public budget expenses at the time of increased inflation can be too late." ADB Review notes.