But cooperation with the IMF was an important era, during which a poor and economically backward Azerbaijan turned into a developed country with a sustainable economy and a strong financial market.
Nevertheless, the information about the closure of the IMF Baku office was received ambiguously in the economic community. But then, it is quite understandable.
In a letter addressed to the Ministry of Finance of Azerbaijan, the Middle East and Central Asia Department of the IMF, on the one hand, justifies its decision by saying that since Azerbaijan already has a strong economy and financial resources, there is no need for a program cooperation in the near future. On the other hand, Director of the Department Jihad Azour stressed that the closure of the office in Baku “will not weaken the IMF’s relations with Azerbaijan.” The Fund will continue organizing regular missions to discuss economic and financial policies related to Azerbaijan’s development strategy and provide technical assistance to the country if necessary.
Articles on this matter in some media outlets are even tinged with certain relief. Finally, they are saying, we have been freed from the intrusive custody of the IMF.
It would be appropriate to recall here that the IMF is the world’s largest financial organization, established by the United Nations. With 190 countries as members, the Fund provides short- and medium-term loans to countries with balance-of-payments deficits. The IMF can issue loans to any of the member countries experiencing a shortage of foreign currency to cover short-term financial obligations. Admittedly, subject to certain conditions and recommendations, which is often perceived very ambiguously by local authorities.
The IMF’s policies and recommendations for developing and distressed countries have repeatedly been criticized, as the implementation of the IMF’s recommendations and conditions is ultimately aimed at tying the country to international financial flows rather than at improving national economies.
Fortunately, Azerbaijan was spared this fate. Our country became a member of the IMF in September 1992 and immediately began to actively cooperate with the Fund. Both in the military-political and economic aspects, those were the hardest years for Azerbaijan, which had just gained independence. The IMF assistance at that time cannot be overestimated. Its loans and consultations enabled Azerbaijan to stay afloat. It was no coincidence that an IMF Resident Representative Office operated in our country between 1993 and 2009.
The Fund has always been favorably disposed towards Baku. But with the arrival of the first oil under the Contract of the Century, the country quickly began to improve its economic performance, and since 2005, Azerbaijan’s cooperation with the IMF has been carried out only in the form of consultations. That is, for about twenty years our country has not used the Fund’s loans, and all cooperation comes down to regular consultations.
And why would Azerbaijan need IMF loans if our country’s balance of payments has been running a surplus of billions of dollars for many years? Azerbaijan’s GDP has increased dozens of times, the poverty rate in the country has dropped to 5 percent, and the external debt is at its lowest. By the way, Azerbaijan is in 9th place in the world by this index. As for foreign currency reserves, they now total $65 billion, 10 times more than the external debt, which makes up only about 10% of the GDP: an indicator that even the most developed countries cannot boast, their public debt these days often running close to 100% of their GDP or even exceeding it. Just look at the United States, where the controversy over the national debt ceiling, which now stands at more than $31 trillion, threatens to bring the country into default.
To sum up, it is safe to say that Azerbaijan has now joined the ranks of economically developed countries and does not need the IMF’s financial assistance.
But this by no means implies that the parties cut all ties. It is not for nothing that Jihad Azour stresses that closing the office will not weaken the IMF ties with Azerbaijan, which is essential for both partners, as they need mutual consultations and exchange of views. IMF missions will continue to come to Azerbaijan as usual.
Mamed Efendiyev
Translated from Haqqin.az
