Expected Trends in Economy in 2021 - Opinions of Deputies, Experts

Baku / 06.01.20 / Turan: In the past 2020, the Azerbaijani economy faced serious difficulties. Due to the coronavirus pandemic, large, medium and small businesses, service facilities, trade were closed for months, and some of them completely ceased their activities. Some of the people working at these enterprises were left without work. The state paid compensation to this group of objects.

2021 in Azerbaijan began with an increase in prices for AI-92 gasoline and diesel fuel.

So what other economic processes are expected in 2021?

Mazahir Efendiyev, a member of the parliamentary committee on economic policy, industry and entrepreneurship, told Turan that today Azerbaijan has entered a new stage in the direction of whitewashing the economy, as well as digitalization and innovation, which characterizes a model of sustainable economic development. “2020 remains in the memory of our country as the year of victory and the fight against the COVID-19 pandemic. And the period of post-war and post-pandemic will be in 2021, when we enter a new phase. Of course, this year an improved economic model will be applied that meets new challenges."

According to the deputy, in this regard, the main stimulating mechanisms for the sustainable development of regions will also be considered, regarding regions which in the post-pandemic period risk being left out of sustainable functioning or where the projected economic growth may be insignificant. “The main feature of these mechanisms is to offer local solutions to meet the specific needs of regional development. Maintaining macroeconomic stability, improving employment and social welfare of the population and diversifying the non-oil sector will remain the top priorities under the leadership of Mr. President this year. ”

M. Efendiyev stressed that the coronavirus pandemic has dealt a big blow to tourism, which is considered one of the leading sectors of the non-oil sector in Azerbaijan. "But over the past period, through the implementation of various economic state programs, the provision of preferential agricultural loans and leases, the agricultural sector has steadily developed and in 2021 it will become the main area of ​​the non-oil sector."

The MP noted that 2021 has been declared by the United Nations the International Year of the Creative Economy for Sustainable Development. "The international authority of Azerbaijan as an exemplary UN member state, its world leadership especially in the field of tolerance and multiculturalism, as well as its economic stability, once again prove that Azerbaijan, as an integral part of the modern world, in accordance with modern challenges, will soon demonstrate to the whole world our sustainable development in the South Caucasus region as a whole, ensuring high living conditions for all people in Nagorno-Karabakh. It is also no coincidence that 2021 in our country is called the “year of construction”, our main goal, along with the restoration of the liberated territories, will be the introduction of a new model economic development in Karabakh with the participation of foreign and local investors.”

The MP noted that within the framework of the self-employment program, citizens will return to their native land, to Karabakh, as small entrepreneurs. "As you know, the approved state budget of the Republic of Azerbaijan for 2021 provides funds in the amount of 2.2 billion manats."

Economist Zohrab Ismail told Radio Azadlig that economic reforms will be necessary in Azerbaijan in 2021. Currently, oil prices are low and Azerbaijan's oil revenues have plummeted. During these years, the State Oil Fund will spend significantly more of its income. If it receives an income of 8 billion, it will spend 12 billion 250 million manats. This will make necessary economic reforms in Azerbaijan, and, most likely, the Azerbaijani authorities will be forced to do it."

Z. Ismail added that the costs will be huge, and these costs will be covered by the reserve. “There are very large expenses, and these expenses come from the reserve. True, Azerbaijan has approved the State Budget for this year, but there are a number of expenditures, the volume of which is likely to increase. These are mainly expenses associated with the restoration of the territories liberated from the occupation. Despite the fact that 2.2 billion manats has been allocated for these expenses, this may not be enough. But funds were also created, probably attracting external loans, and for the first time in 28 years investments will be made in Karabakh. On the other hand, many jobs will be created there thanks to the work on the restoration of the liberated territories.

The expert noted that for the first time, the government of Azerbaijan has sharply increased in the state budget of 2021 dividend income from companies whose shares are controlled by the state. “This is almost 60 times more than last year. While earlier the companies, whose shares were controlled by the state, received income in the amount of 3 million manats, now this figure has been brought to 168 million manats. And this follows from the need for reforms. The companies I mentioned generate income by using government incentives, support, and then exaggerating their costs, making it appear as if the company had no profit. Even with a profit, the government always gave them the opportunity to spend this profit. This year, for the first time, a new approach to state-owned companies has emerged in Azerbaijan, which should bring large revenues to the budget."

The economist believes that the economic crisis will continue this year. “Since the pandemic has not yet been prevented, the vaccination process is likely to continue until the end of the year. This will be accompanied by a crisis and will lead to an increase in poverty and stratification in Azerbaijan.

 At the same time, the revenues of companies, including in the non-oil sector, will continue to decline."

Z. Ismail stressed that this year Azerbaijan began exporting gas to Europe. "This is also an important economic event and will expand relations between Azerbaijan and the European Union."-0-