Revenue growth is deceptive

Social policy was very restraint, but last year there were promises to strengthen social direction of the future budgets. The growth of the population’s incomes should not delude, because during a year even the State Statistical Committee admitted that it does not know how many rich people are there in the country. Meanwhile, state statistics insisted that middle class consists 70% of population, although we know that middle class is not only the level of incomes, but also social status of the head of the family, availability of housing, certain mentality and education, precise purpose-making. There are many things that at the state of embryo in our country. Even if one evaluates middle class on the level of incomes, the situation is not good and 13% growth during 11 months was ensured mainly at the expense of growth of incomes of the high group of population. The difference in salary of various categories of budgetary organizations reflected this reality. Some studies conducted last year should sober up. In particular, famous economist and mathematician Gorkhmaz Imanov evaluated consequences of the socio-economic situation in the country through the parameters of developed related to quality of life. As compared to the same parameters in the European countries, the situation is more or less normal. Azerbaijan is far behind on all the remaining indexes.

The population has become rather advanced. It does not demand rise in salaries or pensions, though in rich Azerbaijan they are lower, than in some CIS member-states. It even took quietly unfair re-evaluation of deposits in the Soviet Saving Bank. The population first of all expects reduction of corruption level in the country, expanding of economic freedom, protection of property, realizing that population’s incomes will grow automatically, if these conditions are met.

The amendments to the Tax Code will not bring anything good to the population. Considering that citizens are the main users of all possible services, then it is unfair to increase duties for notary services, technical inspection of cars, suits and all other things. The upper tax rate has been increased up to 2500 and the profit tax from this sum was reduced from 30 to 25%. Therefore, conditions of taxation for the high-paid employees of the state system and top managers in the companies have improved. But one should add that the goal of the new amendments to the Tax Code is to improve fiscal environment for business and increase tax collection.

The top ten countries with the highest pension rate have been recently named and Azerbaijan is not on the list. Some optimistic economists (former opposition activists) usually say that Azerbaijan could in the top ten in five years. It is hard to believe it. According to some calculations, by 2020 pensioners will get in average over 270 AZN a month with the average salary of 684 AZN.

At the international conference “Azerbaijan 2020: Look Into The Future” Salim Muslimov, chairman of the State Social Security Fund, said that the pension age for men will remain 63 years and the for women 60 years.

According to the calculations based on the modern methods, by that time inflation rate in the country will not exceed 4%. The hired employees will number 2 million (from 37 to 42% of able-bodied population of the country). During this period life of men in the pension age will be 10 years and life of women 21 years (in average 16.4 years). Average life span of men is 73 years and women – 81 years.

If this is legally confirmed after 8 years employers will be more disciplined regarding to social allocations and their rate will drop from 22% to 15% with increase in allocations at the expense of the salary of employees from 3 to 10%.

By that time total number of pensioners will increase up to 1,328,000 people and 2 payers of social insurance will fall to each retiree.

The Fund’s expenses will total 4.3 billion AZN and specific weight of incomes of the Social Security Fund from social insurance proceeds in total structure of the incomes will increase from 58 to 73%. Therefore, the incomes of the Fund will most likely depend on the budget, though they can be tied up to the Oil Fund, as it has been done in Norway.

The new Housing Code has been operating in Azerbaijan since October 2009 and it is aimed at management of the housing fund in the multi-apartment buildings on the basis of new principles. However, till now these buildings are subordinate to the local executive authorities and they are managed by the municipal authorities. According to the Housing Code, from now on the housing fund should be managed by the owners of the apartments in the buildings and the municipalities will play a great role here. However, only one pilot project to create condominium in Baku is really implemented. The year 2012 really showed that one cannot avoid reforming of the municipal sector, because it touches all strata of population, The government considers several legislations in this area. However, independent experts are skeptical about prompt solution to the problem, because of the powers of executive authorities, municipalities and public organizations in Azerbaijan are not strictly differentiated. One can supposed that the municipal economies will survive this year, because the authorities need them during elections.

The Code of town-planning and construction was adopted in 2012. It is first of all important for proper functioning of the densely populated capital of the country Baku. This is not only the matter of aesthetic appearance. Observation of the Code will affect the housing construction. It should strictly control expensive infrastructural projects, regulate construction in the city and create efficient transport system in the capital. Intellectual transport management system, in which about $100 million has been invested, does not work now. Construction of huge closed parking lots downtown Baku is great, but there is an impression that their construction is not regulated as well. Several projects are not clear – construction of the bridge across the Baku bay and moving of the railway terminal to Balajary district. Such projects, which directly affect population, need public hearings. The government hinted that public hearings are possible, but it did not go any further.

The key issue of the economy was – are economic reforms possible without political reforms? One can refer to many successful authoritarian countries, which managed to implement economic reforms. But this was a result of political will, creation of proper judicial system, fiscal reforms and anti-corruption measures. In our conditions economic competition could strengthen political competition. Protection of right of property demands first of all reduction of power of monopolies. Therefore, the government should revise economic development in the current economic conditions. Only in this case the society can reach a higher level of social existence.