Azerbaijan Should Prepare Its Economy to Drop in Oil Production: Seniors Economist of Eurobank

Oil&Gas Materials 26 February 2008 18:59 (UTC +04:00)
Azerbaijan Should Prepare Its Economy to Drop in Oil Production: Seniors Economist of Eurobank

Azerbaijan, Baku, 26 February / corr. Trend I. Khalilova/ The dramatic rise in the government expenditures poses a threat for the stability of the government finances as the there will be a drop in the oil production in Azerbaijan from 2013, the report of the European Bank of Reconstruction and Development (EBRD), published on 26 February on the Process of Transformation in 2007 said. The expected drop in oil production in Azerbaijan is connected with the development of the reserves in a number of deposits including Azeri-Chirag-Guneshli.

Erick Berglov, the senior economist of the EBRD said in the presentation ceremony of the report that Azerbaijani government should work out a long-term plan of development to get prepare the period when these hydrocarbon resources will exhaust.

According to Berglov, the investments should be put in the human resources, the development of entrepreneurship should be supported and the internal resources should be diversified.

According to the report of EBRD, the success in a fight against inflation will depend on marked decrease of the deficit on the key items of the budget not related with the oil.

While analyzing the current reforms in Azerbaijan experts of EBRD concluded that significant work has been carried out in liberalization of the prices, the establishment of open economy and small entrepreneurship. There is a need to strengthen the competition and there are problems with the development of the entrepreneurship and the improvement of business environment. "There is a need to provide a transparency in holding of tenders, developing of the agreements and fulfilling the obligations proceeding from it," the senior expert of the EBRD said.

Berglov said that Azerbaijani economy has the highest growth rates in the region.

The key recommendations of EBRD to Azerbaijani Government are as follows:

-The structural reconstruction, the increase in investments and the participation of the private sector in energy sector will contribute to the efficiency in these areas and will improve the business climate,

- The anti-monopoly legislation should be implemented in order to develop the economic diversification and to attract foreign investments,

- The macroeconomic stability can contribute to the use of the long-term approach of the government to the budget expenditures directed to the strengthening of the competition in non-oil sector.

The correspondent can be contacted at: [email protected]