IMF Mission Head: ‘In 2016, Growth Rate of Azerbaijani Economy Will Be Negative’

In connection with the reduction of public funding, lending stagnation and the same volume of oil production it is expected that the growth rate of the economy of Azerbaijan will be negative in 2016, at -2.4 per cent, said the head of the IMF mission to Azerbaijan Mohammed El Korci.

According to Turan, quoting the official website of the IMF, El Korci noted that the average inflation rate was 4.1% in 2015, and it is expected to jump to 10% in 2016.

In his opinion, the main problem identified was the banking sector.

‘The devaluation and the recession hit the profitability of banks and exacerbated the problem of many bad debts. The authorities are now taking steps to address the problem of widespread non-performing loans, while a number of impractical banks are closed,’ said El Korci.

According to the head of the mission, the transition to a new economic model largely based on the growth of non-oil private sector will require an ambitious program of structural reforms.

‘It includes a variety of measures - from encouraging competition between companies and simplifying business start-up procedures and the rules of hiring and dismissal of employees to investment in human capital and education. Perhaps, in this case the most urgent task at the moment is quick and well-organized cleaning of the banking system, which will ensure the effective inflow of credit funds into the real economy,’ he said.

El Korci added that the IMF can assist in the first place through cooperation with the authorities in the creation of advanced macroeconomic institutions, frameworks and policies that are essential parts of the mentioned reforms. -------71D