Azerbaijan's State Budget Project for 2020 Calculated at Oil Price $ 55 /Barrel

The Ministry of Finance of Azerbaijan has published on its website a draft state budget for 2020, calculated at an oil price of $ 55 per barrel against the base price of $ 60 per barrel set in the state budget-19, which shows concerns about the instability of the situation on the world oil market.

Almost without changing the size of expected state expenditures - 25.62 billion manat for 2020 (according to updated data, this figure is expected to be 25.2 billion manat for 2019), the government expects a small increase in state budget revenues next year - 24.484 billion manat compared to 23.168 billion manat and a decrease in the state budget deficit to 1.134 billion manat (1.4% of GDP), while according to the results of the current year, the state budget deficit may exceed 2 billion manat (2.5% of GDP).

However, judging by the statistics for 8 months of 2019, the execution of state budget-19 is still in surplus.

So, in January-August 2019, the state budget-19 surplus amounted to 98.2 million manat or 0.2% of GDP with state budget revenues of 14.81 billion manat (an increase of 5.2% compared to the eight months of last year) and expenses of 14.71 billion manat (an increase of 9.1%).

Dependence on the oil sector can be traced in the draft state budget 2020.

Thus, in the revenue structure, 57% or 13.95 billion manat is planned to be provided from revenues from the oil sector, and 43% or 10.537 billion manat from the non-oil sector. Compared to 2019, an increase in budget revenues from the non-oil sector is planned by 11.3%.

It is noteworthy that transfers to the state budget-20 from the State Oil Fund of Azerbaijan are provided for 11 billion 767.5 million manat (an increase of 3.5% compared with the figure for 2019) or 48.1% of all budget revenues. This is the highest rate in 10 years.

In the structure of state budget spending for next year, 10 billion 247.1 million manat (a share of 40.7%) is planned to be spent on social purposes, which is 2 billion 664.2 million manat more than in 2019.

In particular, labor costs in 2020 are planned at the level of 6 billion 723.4 million manat, and for the payment of pensions and social benefits - 3 billion 213.4 million manat, including a transfer to the State Social Protection Fund - 1 billion 426.9 million manat.

Expenditures on the application of mandatory medical insurance (MMI) are planned at the level of 902.9 million manat, purchase of food and provision - 414 million manat, and other social expenses - at the level of 81.2 million manat.

The average annual inflation in Azerbaijan in 2020 will accelerate to 4.6% from expectations for 2019 at 3.7%.

In 2020, 2.46 billion manat from the state budget will go to servicing the public debt, which is 5.3% more than it is planned for 2019.

In 2020, the Azerbaijani government plans to attract foreign loans in the amount of $ 559.4 million, and borrowings on the domestic market are expected to reach 100 million manat.

According to the Ministry of Finance, at the end of 2019, the state debt of Azerbaijan will be 16 billion 482 million manat (0.1% decline in 2019), of which $ 8.86 billion (15 billion 62 million manat) will fall on external debt, and 1 billion 420 million manat - on domestic debt.

Earlier, the government stated that by 2025 it could reduce the volume of state debt of Azerbaijan to $ 7.7 billion or 14.1% of GDP.

The draft state budget-20 has been sent to the Cabinet of Ministers for consideration and may undergo changes, but it is clear that the government remains faithful to the "tradition" of hoping for oil.