International Monetary Fund (IMF) stated that inflation is projected to reach double digits for the first time in more than 15 years in Azerbaijani economy.

This information is provided by IMF’s new “Learning to live with cheaper oil” report on oil-exporting countries of the Central Asia and Causacus.

IMF analysts believe that the guilty party is the depreciation of the national currency - manat, which heightened inflationary pressures in Azerbaijan.

“Depreciation has also put pressure on bank balance sheets, because of currency mismatches and unhedged borrowers”, reads the report.

IMF indicates that dollarization in Caucasus and Central Asia has been high, and has recently increased further amid uncertainty about the future direction of local exchange rates.

IMF analysts recommend the countries of this region to adopt a stronger macroeconomic policy frameworks and better financial sector supervision to maintain financial sector stability.

Meanwhile, IMF projects that Azerbaijan’s GDP may contract by 3 percent in 2016.