Reducing Many Budget Expenditures Shows Ineffectiveness of Budget Process

The Ministry of Finance announced the operational data on the state budget for 2014, according to which the financial year was completed with minimal deficit.

State budget revenues amounted to 18 billion 400,500,000 manat (0.1% of the forecast) and the expenses – to 18 billion 699,300,000 manat (-6.8%). In the fourth quarter revenues amounted to 4 329.9 million manat, which is 23.5% of total revenues for the year, while expenses were 6 billion 5.8 million manat or 32.1% of annual expenditures. The state budget deficit amounted to 298.8 million manat against 1 679 million manat of the approved amount.

The Ministry of Taxes and the State Customs Committee exceeded annual forecasts (7 113.6 million and 1 510 800 000.manat respectively). In this, off-budget revenues of state organizations in the past year amounted to 207.3 million manat compared to 400 million manat of the projected figure.

  The State Oil Fund 100% fulfilled the transfers to the state budget (9,337 million manat).

The amount of capital investments of the state budget amounted to 6,259 million manat. The funding was provided by 100%.

Economist Rovshan Agayev analyzed reduction in the performance of individual functional state budget items. According to his calculations, the costs are cut in the following areas:

General state services- 573.4 million manat or 29%;

Defense - 121.3 million manat (7.5%);

Law enforcement authorities - 136.7 million manat (11%);

Education - 98.1 million. manat (6%);

Health care - 60.3 million manat (8.3%);

Social protection - 101 million manat (5%);

Agriculture - 58.1 million. manat (11%).

The expert believes that if the costs are reduced by 10-15% and the economy does not feel this phenomenon, it may be indicative of some negatives: the budget expenditures are made without taking into account the needs of society and the economy, or they are unaddressed. ----08B