2017 Expected State Budget and Revenue Announced With a 600 Million Manat Deficit

Photographer: Mirnaib Hasanoglu
Photographer: Mirnaib Hasanoglu

According to information given to APA by the Ministry of Finance, a state budget predicting a revenue of 15.95 billion manat and expenditures of over 16.5 billion manat is expected to receive approval. This would entail an annual deficit of 645 million manat.

Former MP turned economist Nazim Baydemirli gave his thoughts on the 2017 budget, saying “

“austerity measures will continue. . . The reduction of the state revenue will have a negative effect on the population of the country. This year’s budget spending decreased by more than 10% and income decreased by 5.2%. One of the positive factors is that the budget deficit is less than in previous years – an approximately 61.4% decrease. In previous years, the government knew oil prices would be higher and expected the shortfall from SOCAR to be covered  by the Oil Fund. This time things have gotten serious.”

Nazim said that from a total of 450 thousand taxpayers, their collective 313 million manat payment will not cover the 353 million manat in government expenses.

“My concern is the increase in the state’s gradual intervention in economic activities. Even if entrepreneurship were stopped among civil servants, that would encourage economic activity. At that time, the Ministry of Finance didn’t seek additional resources, nor did they take austerity measures through the state budget. I would like to draw readers’ attention to the income of the State Customs Committee (SCC). It’s clear that the budget revenues have increased almost 21.5%, while the VAT is expected to increase, to 26.1%.  After all, as seen in last year’s devaluation, everyone has seen there is an economic contraction; because of the lowered purchasing power of the manat, imports have decreased – this is confirmed by the SCC. Then the question arises; if duties are lifted and the tax rate doesn’t increase, how does the customs committee forecast higher performance than last year? This means that the funds collected through the customs committee are a further distraction from the budget problem. . .I can’t view this budget as positively improving the welfare of future generations.”

The economist believes that other sources should be found to improve the socio-economic situation and the government should be encouraged to conduct more wide – reaching reforms. “Usually 62% of budget revenues are customs and property taxes and are collected together. Ninety-four percent of Georgia’s 2016 budget was collected through taxes. In the present situation and over the next few years, however, the government spending can’t be collected solely through taxes; it should be adopting serious reforms and reducing goverment spending.”

Economist Rovshan Aghayev commented on the issue on his Facebook page.

“Recently someone close to the government said that the State should tell the public to prepare to tighten their belts. But our government is carrying on as usual. Take the 2017 budget, for example.  Next year’s spending will be reduced by 1.895 billion manats, a little more than a 10% decrease. Because of the manat, it will be the smallest budget in the last five years. Just in 2011, spending was 15.4 billion manats. In the next 3 years, 2012-2014, spending was 17.4-19.1 billion manat range and 2015-2016 exceeded 18 billion. There is no comparison in terms of the dollar. The exchange rate from now to 2017 is expected to be an approximate 10.4 billion dollar difference. However, in 2007 it was the same difference, but in 2003 it spiked to 13.5 billion dollars. The highest peak was in 2014 at 24.5 billion dollars. In short, the budget will go back to the same level as the previous time when there was a lack of big oil money.”

The economist says that when big oil money started pouring in in 2006, the government increased the volume of transfers from the Oil Fund to the budget. This made the government’s budget larger. Presently, the government has decreased those transfers to the budget, which they manitain should be increased, while shrinking the budget.

According to economist Gubad Ibadoglu, a comparative analysis of budget revenues in the next year show there will not be increased privatization in Azerbaijan.”State-owned property as well as the proceeds from the lease of lands under privatized state enterprises and facilities will only increase a million manats compared with this year. Transfers from the State Oil Fund budget for next year will be cut by 1 billion 515 million manats, so it will be 6.1 billion manats, or 38.1% of the total budget revenue. Up to 62% of revenues, or about 10 billion manats, will come from consumers. One of the significant increase in revenues will be from paid services. It is forecasted to increase revenues by 48 million manats. This means the education spending next year will increase 20%.”

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