Azerbaijan, Baku / corr. Trend I.Khalilova / According to the forecasts of the European Bank for Reconstruction and Development (EBRD), 2007 consumer prices in Azerbaijan will increase by 16%, compared to 8.5% in 2006, as stated by the EBRD report.
For the end of 2007, inflation is forecasted to rise by 14% compared to 11% by the end of 2006. According to the EBRD experts, the significant growth in oil export and salary increases both exert pressure on the money mass. As a result, inflation reached 11.4% at the end of 2006 up from 5.4% at the end of 2005. It took place irrespective of the issue that the National Bank of Azerbaijan increased the rates of re-financing from 9 to 9.5% in July 2006 and to 12% in April 2007.
The Head of the Baku Office of the EBRD, Raymond Konway, said last year that micro-economic stability in Azerbaijan still remains an unsettled problem in Azerbaijan because due to the growth rates of GDP, the budget expenditures increase rapidly.
The IMF confirms that State expenditures influence the inflation indicators with six months delay. "Due to this delay, the fiscal results of 2006 budget show the results for the mid of 2007," the EBRD representative said. In light of the delay's ramifications, the EBRD offered the Government of Azerbaijan to define priorities for the State expenditures.