Azerbaijan's compulsory social insurance charges increases

/AzerNews/

By Aynur Jafarova

The charges for compulsory social insurance have increased by eight times in Azerbaijan in the past decade amounting to 1.780 billion manats.

This remark was made by Head of State Social Protection Fund (SSPF) of Azerbaijan Elman Mehdiyev at a meeting with a mission of the International Monetary Fund (IMF) headed by Raja Almarzoqi.

During the meeting, the sides discussed the fiscal issues on the pension and insurance system of Azerbaijan, implementation of the fund's budget for 2014 and forecasts for 2015.

"Balance of economic growth and increase of social expenditures are always at the center of our attention, which promote the living standards of citizens. As a result of application of the Azerbaijani model of social reforming, one can distinguish three main achievements, which are evaluated today by authoritative international organizations and financial institutions as an example for emerging countries," Mehdiyev added.

The first achievement is ensuring ties between social protection of pensioners and the country's economy based on the principles of market economy.

"The insurance-pension system of Azerbaijan is formed in such a way that the growth of wage, attracted to the social insurance, paves the way for the growth of pensions," Mehdiyev noted. "The share of pension payments in the country's GDP increased from 3.9 percent in 2003 to 5 percent in 2014."

The second achievement of reforms in the pension-insurance system is the successful regulation of the impact of changing demographic trends on the background of the global crisis of the pension system.

The third and main achievement is the fair distribution of financial capabilities among the pensioners of Azerbaijan, who constitute 13.5 percent of the country's population, and addressing their poverty problems by strengthening social protection of pensioners and conducting reforms in this regard.

"Currently, the average scale of monthly pension exceeds the poverty line among the pensioners by 1.7 times, while in 2003 this figure was twice lower the line. In a period of 2003-2014, the average scale of monthly pension increased by 9.4 times, reaching 173 manats," Mehdiyev added.

Almarzoqi, for his part, highly appreciated the works carried out in the pension-insurance system of Azerbaijan, and expressed his confidence in the effectiveness of future cooperation.

Later, speaking at a press conference, Almarzoqi said the crisis in Ukraine will not affect the development of Azerbaijan's economy.

"Azerbaijan's economy is more focused on the export of hydrocarbons, so the crisis in Ukraine could have only an indirect affect on its development. The crisis retards the development of the region. However, Azerbaijan's economy is able to confront these problems, as soon as the oil price is relatively at high level," he noted.

The IMF official believes the sanctions imposed on Russia could have a positive impact on Azerbaijan.

"The sanctions imposed on Russian allow Azerbaijan to export major part of its agricultural products, which will generally have a positive impact on the country's economy as a whole" he added.

Almarzoqi went on saying that Azerbaijan's GDP growth is forecasted at 4 percent in 2014 and at 3.5 percent in 2015, while the inflation rate of the country will amount to 3 percent.

He also noted the IMF mission supports the Azerbaijani government for significant progress towards the fiscal sustainability and fiscal consolidation of the state budget for 2015.

Almarzoqi believes the exchange rate will remain as a stable pillar of monetary policy based on strategic currency reserves of the country.

He also said the next IMF mission will arrive in Azerbaijan on November 24 to prepare for the second assessment of the country's financial sector.

The first assessment was held by IMF jointly with the World Bank in 2003. After this, Azerbaijan adopted laws on banks and the national bank, as well as various legislative documents.

The second assessment of the country's financial sector will start in March 2015 and last till the beginning of June 2015.

"The assessment process will cover all the financial operations of the country," Almarzoqi stressed.

Azerbaijan joined IMF on September 18, 1992. During the years of cooperation with the fund, Azerbaijan attracted IMF's loans worth $577.3 million for realizing six various programs as part of economic reforms.

The cooperation between IMF and Azerbaijan was particularly intensive between 1995 and 2005. Throughout these years, Azerbaijan often enjoyed IMF's consulting and financial assistance to support the government's economic programs