Declining volumes of SOFAZ transfers to Azerbaijan’s budget are compensated by non-oil sector - Vusal Gasimli


December 17, Fineko/abc.az. The consolidated and state budgets for 2020 and the next three years are developed in accord with the new budget rules.

ABC.AZ reports that the statement was made by Vusal Gasimli, the executive director of the Center for Analysis of Economic Reforms & Communications, when commenting on the Law on the State Budget 2020, approved by the country’s leader.

According to Gasimli, budget expenditures can not exceed 3% a year. After achieving success in infrastructure, middle class and army building, Azerbaijan prefers fiscal sustainability with the application of budget rules.

He noted that taking into account the inflation forecast for the next year at the level of 4.6%, the consolidated budget will reach AZN 29.488 million compared to this year, with an increase of AZN 2.117 million or 7.7%.

"Another sign of fiscal sustainability is that, in accordance with the president's task the share of the non-oil budget deficit in the total GDP will decrease by another 1% and will decrease by 29.1%. This means that the consolidated budget is less dependent on oil. In particular, it should be noted that next year social spending is projected at the level of AZN 2.6 bn or 33.5%. On the one hand, with oil prices falling by $5 or 8.3% in next year's budget, and on the other hand, non-violation of budget rules by 33.5% in social spending means strengthening fiscal sustainability. Next year the non-oil sector will compensate for the reduction of income tax from the State Oil Fund (SOFAZ) on the section of transfer to the budget and the share of production.”

By Elmir Murad