OREANDA-NEWS. 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 3Ёц 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 USD 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."