Azerbaijan: ESAF, CCFF, and EFF
The IMF has approved loans and credits equivalent to SDR 79.7 million (about $112 million) to support Azerbaijan’s 1999 economic and financial program and to compensate for an export shortfall. Of this total, SDR 23.4 million (about $33 million) is available under the Enhanced Structural Adjustment Facility (ESAF), and SDR 56.3 million (about $79 million) is available under the Compensatory and Contingency Financing Facility (CCFF). At the same time, the IMF completed the fourth review under Azerbaijan’s existing Extended Fund Facility (EFF) program, releasing an additional tranche of SDR 1.8 million.
|Annual GDP growth||5.8||7.0||8.0||7.0||6.0|
|Consumer price inflation (December to December)||0.4||4.5||0.5||5.0||3.0|
|General government cash balance||-1.7||-3.6||-4.3||-3.1||-2.4|
|External current account balance||-23.7||-30.2||-29.8||-32.5||-38.4|
Medium-Term Strategy and 1999 Program
During 1999-2001, the program envisages average annual GDP growth of about 7 percent and average annual inflation of about 4 percent. While overall growth is expected to be supported by increased oil production, non-oil-sector growth is projected to slow in 1999. The external current account deficit is projected to be 32.5 percent of GDP during 1999, rising to about 38 percent in 2000 and 2001, which will reflect both the lower price of oil exports and a rise in imports. The projected external deficits are expected to be financed mainly through foreign direct investments, with some additional support coming from multilateral and bilateral creditors.
The third year of the ESAF program proposes macroeconomic policy adjustment, including a revised financial program for 1999, and strengthened efforts toward structural adjustment. The projected budget deficit of 3.1 percent of GDP in 1999, while significantly lower than that achieved in 1998, is larger than previously planned. However, this should be manageable given the very low level of government debt and the availability of adequate external financing.
The authorities will continue to pursue a cautious monetary policy during 1999, with a flexible approach to the exchange rate, consistent with financial stability and a competitive non-oil sector.
The authorities attach highest priority to reforming the public sector, tackling corruption, and improving the efficiency of the government. The authorities also plan to focus on measures to restructure the banking sector and strengthen the financial system, broaden and strengthen the privatization process, reform public enterprises, and develop a market-based agricultural sector.
Addressing Social Needs
The authorities continue to be committed to reform in the health and education sectors and to better targeting of the social safety net.
Azerbaijan joined the IMF on September 18, 1992, and its quota is SDR 160.9 million (about $225 million). Its outstanding use of IMF financing currently totals SDR 228 million (about $320 million).
Press Release No. 99/5, January 26
Photo Credits: Gregg Newton for Reuters, page 33; Denio Zara, Padraic Hughes, and Pedro Marquez for the IMF, pages 37-39, 42, 44, and 48.