Press Release: Statement at the End of an IMF Staff Visit to Azerbaijan
October 28, 2014
Press Release No.14/479October 28, 2014
A staff team of the International Monetary Fund (IMF) led by Raja Almarzoqi visited Baku during October 21-27, 2014, to assess macroeconomic developments and prepare for the Article IV Consultation mission in June 2015. The team held discussions with senior government officials and representatives of the private sector and the diplomatic community.
At the conclusion of the visit, Mr. Almarzoqi issued the following statement:
“Economic activity has been resilient to regional turmoil in light of limited economic links with Russia. GDP growth is projected at 4 percent in 2014 and 3½ percent in 2015, with a modest decline in oil output and a slowdown in non-oil growth associated with fiscal prudence and necessary macro prudential tightening. Inflation is projected to hover around 3 percent. Risks arising from low oil prices are mitigated in the short term by reserve buffers.
“The mission encourages the authorities to build upon recent progress toward fiscal sustainability by maintaining fiscal consolidation in the 2015 budget. While the budget oil price assumption of $90 per barrel is prudent, expenditure commitments arising from international events limit fiscal space. Further adverse oil price developments would warrant consideration of a reduction in spending. Nevertheless, the budget should be able to accommodate expenditures that will boost the geographical diversification of gas exports. Completion of the public expenditure and financial accountability assessment (PEFA) update will pave the way for improving public spending efficiency.
“The exchange rate remains the anchor of monetary policy, supported by ample reserves. A gradual move towards exchange rate flexibility would foster financial market development. Further moderating growth in consumer lending, finalizing ongoing bank capitalization, and restructuring the International Bank of Azerbaijan will reduce financial sector vulnerabilities.
“Improving the business climate is crucial for diversification and necessary for replacement of public investment by market-based private investment. Priorities are tackling competition and trade barriers, as well as broadening the coverage of anti-corruption programs.
“Concerted efforts to strengthen macroeconomic statistics, supported by IMF technical assistance, would help policy makers and investors to make better-informed decisions.
“The mission thanks the authorities for their hospitality and constructive discussions.”
| Azerbaijan: Selected Economic and Financial Indicators, 2010–15 | |||||||||||
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| 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | ||||||
| Prel. | Proi, | Proi, | |||||||||
| (Annual percentage change, unless otherwise specified) | |||||||||||
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National income |
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GDP at constant prices |
5.0 | 0.1 | 2.2 | 5.8 | 3.9 | 3.4 | |||||
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Of which: Oil sector 1/ |
5.0 | -9.8 | -5.3 | 0.5 | -1.4 | -0.9 | |||||
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Non-oil sector 2/ |
7.6 | 9.4 | 9.6 | 9.9 | 7.5 | 6.0 | |||||
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Consumer price index (end of period) |
7.9 | 5.6 | -0.3 | 3.6 | 2.5 | 4.0 | |||||
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Consumer price index (period average) |
5.7 | 7.9 | 1.0 | 2.4 | 3.1 | 3.3 | |||||
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Money and credit |
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Net foreign assets |
34.6 | 68.7 | 5.6 | 19.9 | 19.8 | 10.7 | |||||
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Net domestic assets |
13.5 | 2.8 | 40.3 | 8.7 | 22.4 | 24.8 | |||||
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Domestic credit |
8.4 | 7.9 | 39.6 | 4.3 | 22.8 | 17.2 | |||||
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Of which: Credit to private sector |
6.6 | 18.1 | 20.8 | 27.6 | 9.4 | 16.3 | |||||
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Manat base money |
31.6 | 29.4 | 27.1 | 10.7 | 24.4 | 17.6 | |||||
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Manat broad money |
34.8 | 32.5 | 25.5 | 19.0 | 14.5 | 10.0 | |||||
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Total broad money |
21.9 | 32.1 | 20.6 | 15.4 | 19.7 | 17.6 | |||||
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Foreign currency deposits ratio to broad money |
21.2 | 20.9 | 17.7 | 15.1 | 18.8 | 24.1 | |||||
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Velocity of total broad money (M3) 3/ |
2.8 | 2.6 | 2.3 | 2.4 | 2.2 | 2.1 | |||||
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External sector (in US$) |
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Exports f.o.b. |
25.5 | 30.3 | -5.4 | -2.1 | -10.4 | -15.6 | |||||
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Of which: Oil sector |
25.7 | 30.9 | -6.7 | -2.1 | -10.9 | -17.2 | |||||
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Imports f.o.b. |
3.6 | 50.7 | 3.1 | 5.0 | -5.9 | -7.8 | |||||
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Of which: Oil sector |
19.6 | 35.5 | -5.9 | 7.3 | 3.1 | 2.9 | |||||
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Export volumes |
-1.4 | -3.3 | -6.1 | -1.2 | -9.2 | -12.7 | |||||
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Import volumes |
-4.0 | 38.2 | 4.9 | 6.4 | -4.5 | -6.4 | |||||
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Terms of trade |
27.1 | 30.7 | 2.5 | 0.5 | 0.2 | -1.8 | |||||
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Real effective exchange rate |
1.1 | 2.6 | 0.8 | 3.0 | … | … | |||||
| (In percent of GDP, unless otherwise specified) | |||||||||||
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Gross investment |
18.5 | 21.2 | 22.7 | 23.1 | 23.1 | 24.1 | |||||
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Consolidated government |
12.5 | 16.0 | 16.1 | 16.6 | 16.7 | 18.1 | |||||
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Private sector |
6.1 | 5.1 | 6.7 | 6.5 | 6.5 | 6.0 | |||||
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Of which: Oil sector |
1.9 | 2.1 | 3.1 | 2.9 | 2.9 | 2.8 | |||||
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Gross domestic savings |
52.5 | 54.1 | 50.7 | 45.9 | 41.7 | 36.4 | |||||
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Gross national savings |
46.6 | 47.6 | 44.5 | 40.1 | 36.9 | 32.8 | |||||
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Consolidated government |
27.1 | 29.7 | 20.9 | 17.4 | 14.3 | 9.3 | |||||
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Private sector 4/ |
19.5 | 18.0 | 23.6 | 22.7 | 22.6 | 23.5 | |||||
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Consolidated central government finance |
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Overall fiscal balance |
14.6 | 13.6 | 4.9 | 0.8 | -2.4 | -8.9 | |||||
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Non-oil primary balance, in percent of non-oil GDP |
-36.3 | -40.3 | -45.4 | -45.1 | -43.0 | -44.2 | |||||
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External sector |
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Current account (- deficit) |
28.0 | 26.5 | 21.8 | 17.0 | 13.7 | 8.7 | |||||
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Foreign direct investment (net) |
0.6 | 1.4 | 1.1 | 1.5 | -0.2 | 0.9 | |||||
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Public and publicly guaranteed external debt outstanding |
7.4 | 7.3 | 9.2 | 11.7 | 14.4 | 15.0 | |||||
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Memorandum items: |
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Gross official international reserves (in millions of U.S. dollars) |
6,721 | 10,887 | 11,587 | 13,787 | 15,787 | 17,787 | |||||
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Nominal GDP (in millions of manat) |
42,465 | 51,158 | 53,968 | 57,708 | 60,487 | 65,110 | |||||
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Nominal non-oil GDP (in millions of manat) 2/ |
22,243 | 25,393 | 29,766 | 34,051 | 37,522 | 41,347 | |||||
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Nominal non-oil GDP (in millions of USD) 2/ |
27,877 | 32,286 | 37,919 | 43,405 | 47,925 | 52,811 | |||||
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Nominal GDP per capita (in U.S. dollars) |
5,847 | 7,106 | 7,538 | 8,160 | 8,658 | 9,340 | |||||
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Nominal GDP (in millions of U.S. dollars) |
52,913 | 64,819 | 68,700 | 73,537 | 77,180 | 83,161 | |||||
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Oil Fund Assets (in millions of U.S. dollars) |
22,766 | 29,800 | 34,058 | 35,712 | 38,309 | 32,802 | |||||
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Population (mid-year, in millions) |
9.0 | 9.1 | 9.2 | 9.3 | 9.3 | 9.4 | |||||
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Exchange rate (manat/dollar, end of period) |
0.798 | 0.787 | 0.785 | 0.785 | |||||||
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Sources: Azerbaijani authorities; and IMF staff estimates and projections. |
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1/ Includes the production and processing of oil and gas. |
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2/ Includes the transportation of oil and gas (except transportation through the western route), as well as the export tax paid by the state oil company. | |||||||||||
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3/ Defined as gross domestic demand (excluding oil sector-related imports) divided by average broad money. |
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4/ Historical data includes statistical discrepancy. |
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5/ IMF staff estimates of the macroeconomic framework consistent with the authorities’ approved budget. |
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