What 2014 state budget promises in Azerbaijan?

By AzerNews


The draft was submitted by the Economic Policy, Social Policy, Security and Defense, Natural Resources, Energy and Ecology, and the Agrarian Policy Committees of the parliament.

During the discussions, Finance Minister Samir Sharifov said that continuation of social policy, providing finance for the increase of pensions and salaries, and improvement of refugee and IDP welfare remain the priorities of Azerbaijan's state budget for 2014.

"Increasing the specific weight of revenue from the non-oil sector, pursuing a balance between local and urban incomes, and reducing tax debt will be the priorities of the revenue side," Sharifov said.

He went on to say that Azerbaijan's 2013-state budget for the first three quarters left Azerbaijan with a surplus.

Azerbaijan's state budget revenues and expenses amounted to 14.33 and 12.72 billion manats respectively, resulting in a surplus of $ 1.61 billion manats in the first three quarters.

"The state budget revenues exceeded expenditures in the first nine months," he said. "We expect this dynamics to continue and the year to come to an end with a surplus."

The minister also said that the improvement of the power supply network in Azerbaijan will require an additional 3.5-4 billion manats.

According to him, work will cover all the regions of the country and will include the replacement of power transmission lines, the construction of substations and transformers, etc.

He also said that 10 billion manats will be devoted to the resolution of water supply problems.

"One part of these funds will be taken from the state budget and another part will be provided by getting loans from international financial institutions such as the World Bank, the Asian Development Bank, and the Islamic Development Bank. The government is already in negotiations with them. Of course, we will not be able to ensure financing of such volumes in one year," Sharifov said.

He also said that the most important task put by the Head of the State was the construction of township and rural roads which required about 200 million manats.

Sharifov went on to note that the Finance Ministry expected a reduction in the growth rate of the main budget parameters in the coming years.

"In 2014, the budget expenditures will exceed 20 billion manats. This is a historic figure, and a very good sign for a young country like Azerbaijan. However, Azerbaijan's name is already in the list of middle-income countries, so the growth rate of its budget parameters will decrease in future," he said.

The minister said that Azerbaijan will continue to encourage revenue growth, citing the fight against illegal employment and tax evasion as examples.

He also said that the finance ministry had prepared a number of proposals for the transition of several regions of the country to self-financing.

"We have to admit that some regions will not be able to move to self-financing, but we have prepared proposals for the rest of them on how to speed it up," he said.

Revenues of the state budget and the expenses for next year were projected to be 18.384 and 20.063 billion manats respectively.

It is expected that in 2014 the revenues be lower for 775 million manats than the forecasted figures in 2013 and will exceed the actual figures of 2012 by 1.103 billion manats.

The budget deficit is projected at 1.679 billion manats, compared to 691 million manats for 2013 and the actual figure of 135 million manats for 2012.

Revenues of the consolidated budget for 2014 were estimated at 21,986 billion manats which exceeds the forecasted figure for this year by 1.257 billion manats, and the actual 2012 budget performance by 352.5 million manats.

Expenditures will amount to 24,444 billion manats which is 56 million manats lower than the predicted figure for this year by and 5,982 billion manats higher than the actual 2012 budget performance.

The consolidated budget deficit is projected at 2.458 billion manats, making up 4.2 percent of the projected GDP.

The growth of local revenues in the draft budget for 2014 is projected at 11.9 percent -779 million manats. Compared to the actual figure for 2012, the growth of local revenues in 2014 is 46 percent.

Deputy Economy and Industry Minister Sevinj Hasanova said that the average annual growth rate of Azerbaijan's non-oil GDP will exceed the anticipated levels in the medium term.

"The forecasts for the country's socio-economic development by the ministry have taken into account the development concept 'Azerbaijan 2020: A Look into the Future' which reflects the goals and tasks that the country's economy feces in the medium term," she said.

"At the same time, if the average annual growth of Azerbaijan's non-oil GDP at seven per cent in the mid-term is sufficient to achieve the goals , then our prognosis indicates that this figure may be more than an average of eight percent a year."

According to Hasanova, it gives ground to say that the tasks of Azerbaijan's economy will be fulfilled ahead of time in the coming years.

Hasanova went on to note that supporting macroeconomic stability and developing the non-oil sector are among the priorities of the ministry of economy and industry.

"The macroeconomic indices of the national economy are steadily improving," she said.

According to the forecasts, Hasanova added, the country's strategic currency reserves currently allow to completely fund import over five years.

Azerbaijan's strategic currency reserves are now close to $50 billion, accounting for 70 percent of the GDP.

Executive Director of the State Oil Fund SOFAZ Shahmar Movsumov said that the fund will direct about 800 million manats of investments into the construction of the Trans Anatolian pipeline.

In 2014, the SOFAZ will allocate about 100 million manats to the project of developing broadband Internet, 223 million manats to the construction of the STAR refinery in Turkey, and 285 million manats to the construction of a new oil, gas and petrochemical complex.

The fund will continue financing existing projects as well.

The SOFAZ revenues are estimated at 11.626 billion manats, while expenditures are expected to be 11.291 billion manats in the consolidated budget.

"As in previous years, the large part of the revenues is expected to be provided by the direct sale of oil and gas, and $380 million or $480 million manats are expected from asset placement," the SOFAZ head said.

Azerbaijan's Parliament has also submitted the draft law on the budget of the State Social Protection Fund (SSPF) and the draft law on the cost of living and need criteria for 2014 for further consideration.

According to the project, the SSPF's expenditures and revenues are projected to increase by 11.2 percent or 295.8 million manats up to 2.928 billion manats in 2014.

The cost of living in the country will increase from 116 manats this year to 125 manats in 2014.

The draft law 'On the level of need criteria for 2014' provides for an increase of this criterion of targeted social assistance from 93 manats in 2013 to 100 manats.

Deputy Chairman of the SSPF Elman Mehdiyev said that a decrease in the volume of transfers from the country's state budget to the budget of the SSPF is planned in the future.

"The share of transfers from the state budget in the total structure of the fund's income is 38.9 percent, 2 percent less than 2013," Mehdiyev said.

Chairman of the Economic Policy Committee Ziyad Samadzade said that the figures reflected in Azerbaijan's draft state budget for 2014 paint a picture of the future development of the country's economy.

"I would like to note that the national economy's dependence on oil will decrease. This is clearly shown by the fact that the specific weight of the economy's non-oil sector in Azerbaijan's GDP has reached almost 68 percent," he said.