>>Azerbaijan needs to restructure its economy, says the Washington-based lender
STORY: Although probably not wholly unexpected, the IMF’s assessment of Azerbaijan’s economy was still relatively blunt.
Instead of increasing public spending the Azeri authorities need to reduce government expenditure while improving its efficiency, as well as enhancing the business climate in general, media quoted Raja Almarzoqi, head of the IMF’s mission to Azerbaijan, as saying (March 12).
Like other energy-rich former Soviet states — Kazakhstan, Uzbekistan and Turkmenistan for example — Azerbaijan’s economy is heavily tilted towards cash earned from gas and oil.
Most of Azerbaijan’s energy-fuelled growth has occurred over the last decade. Now the government wants to boost other sectors of the economy and has promised various cash injections.
But the IMF said this strategy comes with risks.
According to Bloomberg news agency, Mr Almarzoqi cut straight to the point. “The 2013 budget is expansionary and creates overheating risks,” he said.
He backed up this statement with figures. Public spending and a significant increase in the non-energy economy will nearly double Azerbaijan’s GDP growth to 4.5% in 2013. Inflation, though, will also increase to 7% from 1.1% last year.
This story was first published on March 15 2013 in issue 127 of the Conway Bulletin’s Central Asia & South Caucasus News. To subscribe to this weekly 1-page newssheet click here