STABLE TREASURY

As we approach the end of the year, the main role in the economic life of any country is played by debates about the state budget. And in particular, the most heated debate is caused by the declining oil prices and the uncertainty of the long-term forecast of this decline.

But the Azerbaijani government has taken into account both the decline in the price of "black gold" and possible further drops. All this was made public in detail as part of the budget debates in parliament.

Everything will be fine...'

Thus, Azerbaijan enters into 2015 with a consolidated budget, the revenues of which will amount to 20.717bn manats and spending - 25.911bn manats.

The main parameters of the Azerbaijani state budget for next year are as follows: the revenues increased in comparison with the current year by 5.7 per cent and are expected to be 19.438bn manats (35.5 per cent of GDP), expenditure is expected to reach 21.1bn manats (a growth of 5.2 per cent), while the deficit will be 1.662bn manats or 2.8 per cent of GDP.

At the same time, the Accounting Chamber of Azerbaijan believes that the real budget deficit in 2015 will be less than projected, given the rate of GDP growth in the current year and projections for the economic outlook for the next year. The experience of recent years shows that there are no problems in this field, because the budget revenues are overfulfilled or used less.

"In 2015, the volume of transfers from the State Oil Fund (SOFAR) to the state budget is planned at the level of 10.388bn manats (53.4 per cent of revenues), which is 1bn manats more than in 2014. However, when compared with the indicator of 2013, in 2015 the volume of transfers from the State Oil Fund will be reduced by 2bn manats," Finance Minister Samir Sarifov said. He said that in the future, the government plans to reduce the volume of transfers, but in the medium term.

The structure of the remaining revenues of the state treasury will not undergo significant changes next year. The main part of the proceeds is expected through the Ministry of Taxes - 7.1bn manats (an increase of 0.1 per cent) and the State Customs Committee - 1.59bn manats (an increase of 5.3 per cent).

In the meantime, the state budget depends on revenues from the sale of oil and gas, and the current situation on the world market, of course, begs the question: Will the Ministry of Finance be able to cope with the financing of budget spending if the price fluctuations are long-term? According to Sarifov, the Azerbaijani government is constantly monitoring the situation with the price of oil on the world market. "The budget for 2015 has been prepared on the basis of an average oil price of 90 dollars per barrel. However, we have different models of influencing the state budget in case of lower oil prices on world markets," he said. The government has for several years successfully applied the practice of fiscal adjustment every six months, however, until recently it was mainly done to increase certain items of spending due to a growth in revenues.

Parliament Speaker Oqtay Asadov also believes that such forward-looking indicators in terms of political and economic instability in the world and the region can be considered acceptable, and the state budget of 2015 was prepared taking into account the real level of the development of the country and the possible negative impact of the developments taking place in the world. "The state budget for 2015 provides the basis for the further sustainable development of the Azerbaijani economy and for the implementation of government programmes," Asadov said.

Such different costs...

With regard to 2015 budget spending, its social dimension also remained unchanged - social spending amounts to 27.6 per cent of all expenses of the state treasury, which is an increase of 9.2 per cent.

The military spending of the state budget is also growing steadily and justifiably. In 2015, it amounted to 3.783bn manats (27.2 per cent more than in 2014), i.e. 17.9 per cent of all budget spending. "Ensuring national security, strengthening the country's military power, improving support for the armed forces and enhancing the social security of the military remains a priority for the budget," Sarifov said.

A point of interest to many is the costs of preparing for the first European Games to be held next summer in Baku. It became known that the state treasury will allocate 1.3bn manats for the creation of sports infrastructure for the Games and organizational and other works.

With regard to external debt, according to the chairman of the Accounting Chamber, Vuqar Gulmammadov, the state budget for 2015 assumes a "cautious approach to the size of the limit on external and internal borrowings". "The cost of servicing the public external debt for 2015 is set at 3.7 per cent of budget spending (703m manats). The prediction of payments on external debt is 0.8 per cent higher than the indicator of 2014, which is due to the placement of government securities in foreign currency on the international market," Gulmammadov said.

According to Sarifov, the upper limit of the external debt of Azerbaijan in 2015 compared with this year was reduced by 500m manats and defined at the level of 1.5bn manats, which will make it possible to keep the ratio of external debt to Azerbaijan's GDP in a balanced way and even gradually reduce it.

"Taking as a basis the instruction of Azerbaijani President Ilham Aliyev on the optimization of foreign loans with state guarantees to the country's GDP and the retention of this ratio below 10 per cent, a strategy of public debt management was defined, and its main objectives were set in the state budget for 2015," the minister said.

Well, as you can see, apart from some aspects, the state budget of Azerbaijan in 2015 will not undergo special conceptual changes. The positive attitude and the government's composure amid the current controversial developments in the global economy allow us to hope that there will be no deviations from traditions in the implementation of the planned forecasts.