Natalia Tamirisa, Resident Representative of International Monetary Fund (IMF) for the Republic of Azerbaijan, in an interview with APA-Economics spoke about the main challenges facing the Azerbaijani economy, monetary policy in the face of rising inflation, and the current state of the banking sector.
- When will the IMF conduct discussions for the 2022 Article IV Consultation with Azerbaijan?
- The next Article IV Consultation is tentatively planned for the middle of the year.
-How do you assess the current situation in the banking sector of Azerbaijan?
-In our last Article IV Consultation, we found the banking sector in Azerbaijan to be generally sound and emphasized the need to monitor the impact of the crisis, as well as the forbearance measures introduced during the crisis, on bank soundness. A fuller discussion can be found in the report.
-Which policy recommendations could be the most efficient to combat rising inflation? Should the Central Bank consider further policy rate increase?
-The proper policy response to higher inflation often depends on the source of inflation, and external factors have played an important role in the recent increase in prices. The CBA will need to balance the risks carefully in any future rate decision, and we are looking forward to discussing these issues with the authorities in the coming months.
-Which reforms does Azerbaijan need now to diversify the economy and secure recovery of the non-oil sector?
-Some of the obstacles that could be addressed to support economic growth include weak institutions, limited SME access to credit, high informality in the economy and a large skills gap, as well as inefficient labor, product and service markets. A fuller discussion can be found in the recently published Article IV report.