An International Monetary Fund (IMF) mission lead by Raja Almarzoqi visited Baku during March 4-17, 2014 to conduct 2014 Article IV consultation discussions. The team met with the Minister of Finance, Chairman of the Central Bank of Azerbaijan (CBA), other high level senior officials, and representatives of the private sector, civil society, and the diplomatic community
At the conclusion of the visit, Mr. Almarzoqi issued the following statement:
“The success of the government’s debut Eurobond amid market turbulence in the region is a testimony of investors’ confidence in Azerbaijan’s prudent management of the oil windfall. The key challenge ahead is reducing the oil dependence, while fostering a diversified private sector-led growth.
“The near-term economic prospects for 2014-15 are favorable, with growth of non-oil gross domestic product at around 8 percent and inflation stable at a low single digit level. A fall in oil prices with a potential deterioration in the global outlook and key emerging markets is the main risk.
“The fiscal policy tightening envisaged in the approved 2014 budget is welcome and should be followed by a decisive medium-term fiscal consolidation strategy. This would free up resources for private investment, thereby helping to diversify the economy away from oil dependency.
“The intention of the Central Bank of Azerbaijan (CBA) to keep monetary policy in a neutral stance is well placed, as are its initiatives to slow the growth in consumer loans. Yet these measures should be monitored closely. Recent measures taken by the CBA to strengthen financial regulations will help ensure financial stability, but further actions are needed to increase the resilience of the system and competition in interest margins.
“Actions to strengthen the rule of law (independence of the judicial system) and broaden anti-corruption efforts, along with a new competition code that eliminates formal protection for certain business, would help create a competitive private sector-led non-oil economy.