World oil prices will allow Azerbaijan to increase budget revenues by 34.7 percent of GDP

The Azerbaijani Parliamentary committees on economic and social policies recommended this week a bill "On amendments to the Law on the 2011-state budget of Azerbaijan" for discussion to the parliament.

Presenting the bill, Finance Minister Samir Sharifov said the budget projections are adjusted under Azerbaijani President Ilham Aliyev’s instructions to create additional financial support for activities to strengthen the social protection of population, primarily with a view to continue reforms in the pension system and raise salaries of employees of the budgetary institutions, social allowances, stipends and other social benefits, as well as fund a number of investment projects in the social and infrastructural sectors.

Sharifov said the favorable situation in the world oil market enabled to keep the cost of the Azerbaijani oil by more than 80 percent above the price set in the 2011-state budget ($60) fora long time.

Thus, additional revenues of the State Oil Fund of the Azerbaijan Republic totaled 976.4 million manat in the first quarter of 2011 compared to the earlier projected 193.5 million manat. Accordingly, the additional revenue hit $ 1.1 billion manat. Given the positive situation on the world oil markets due to price differences approved in 2011 in the state budget, the State Oil Fund expected additional revenue," Sharifov said.

The bill proposes to increase state budget revenues by 3.493.2 billion manat, which means a 29-percent increase in revenue compared to the forecast - up to 15.554.2 billion manat.

The share of budgetary revenues in GDP is expected to increase to 34.7 percent by late 2011, which is 4.7 percent more than the approved forecast.

Sharifov said that revenue growth will be provided by four sources: through the Taxes Ministry at 740 million manat, State Customs Committee - 20 million manat, transfers to the State Oil Fund - 2723.2 million manat and other income - 10 million manat.

As a result, the Taxes Ministry’s plan amounted to 5.16 billion manat, increasing by 16.7 percent in relation to the approved forecast for 2011 and by 20.2 percent (867.2 million manat) in relation to 2010. This growth will be achieved through additional deductions for income tax from the Azerbaijan International Operating Company - 450 million manat and SOCAR - 180 million manat on income tax and the income from the difference between the contract price of goods produced and wholesale price in the country.

The forecast for the State Customs Committee is proposed to increase to 1.140 billion manat, which is 1.8 percent more than the approved forecast for 2011 and by 3.5 percent in relation to the actual figure of 2010. The Customs authorities will transfer to the state budget revenues worth 830 million manat through collection of VAT, increasing by 1.5 percent and 2.3 percent respectively, from customs duties - 223 million manat (increasing by 3.7 percent and 2.2 percent, respectively).

Budget expenditure is projected at 15.941.2 billion manat with a 25 percent increase (3.193.2 billion manat) compared to the draft state budget approved in 2011.

After increase in the budget expenditure, operating costs of the public budget will comprise 7.716.5 billion manat (48.4 percent of total expenditure), capital expenses - 7.878 billion manat (49.4 percent), the costs associated with servicing debt - 346.7 million manat (2.2 percent).

Thus, 66.3 percent or 462.7 million manat of 698 million manat provided for the increase in operating costs, will be spent on implementation of pension reforms and financing costs associated with an increase in social benefits and pensions.

Some 77.8 percent or 2.484.1 billion manat of the amount for additional increase in the expenditure fell to the state capital investments, which is 73.5 percent more than the expenditure approved for these purposes.

These funds are provided to fund the refurbishment and building work in schools, construction of dormitories for students, implementation of gas related programs in the country, improvement of electrification in the country, construction and reconstruction of water and sewage systems, implementation of state program on development of Baku and its settlements, construction and repair of roads and construction of fertilizer plant in Sumgait.

It is planned to cut by 300 million the budget deficit, which set at $687 million manat in the 2011 state budget, through additional income. After revising the state budget, the ceiling of the budget expenditure is projected at 18.634.3 billion manat and consolidated budget surplus - 1.368.5 billion manat.

The official exchange rate is 0.79 manat to $1 on May 24.


/Trend/