IMF: "Azerbaijan must tight monetary policy"

Baku. 3 June. REPORT.AZ/ International Monetary Fund (IMF) recommends to strengthen the monetary and exchange rate policy frameworks to allow greater exchange rate flexibility. Report informs citing the statement released by the IMF. 

According to the statement, the bank advices to tight monetary policy to bring inflation under control and increase demand for manat.

'The authorities concur with the need to return to a fiscal consolidation path in 2017 based on reducing inefficient public spending and increasing non-oil tax revenues. Other policy priorities include formulating and pre-announcing a multi-year fiscal consolidation plan, implementing a rule-based fiscal framework, and strengthening the monetary and exchange rate policy frameworks to allow greater exchange rate flexibility', the statement says.

"The authorities reiterated the importance of maintaining a stable macroeconomic environment. Azerbaijan’s buffers remain ample but further actions are needed to maintain them at comfortable levels. The authorities concur with the need to return to a fiscal consolidation path in 2017 based on reducing inefficient public spending and increasing non-oil tax revenues. Other policy priorities include formulating and pre-announcing a multi-year fiscal consolidation plan, implementing a rule-based fiscal framework, and strengthening the monetary and exchange rate policy frameworks to allow greater exchange rate flexibility. A tight monetary policy to bring inflation under control and increase demand for manat will be required', the document reads.

Analytical Group of Report News Agency believes that such a statement means the increase in the interest rates in Azerbaijan and wider flow of official currency rate. It's expected that growth in the interest rates will accelerate importance of Azerbaijani manat, exchange rate policy flexibility will reduce the interest of population and investors in foreign currency reserves.