Every Third Manat Hid in Shadows

Baku / 12.05.17 / Turan: The share of the shadow economy in Azerbaijan last year amounted to about 30% of the Gross Domestic Product (GDP), which remained practically unchanged compared to the level of 2015, the Center for Sustainable Development Studies said. However, experts of the World Bank indicate that the share of the non-observed economy in our country reaches 40% of GDP.

The main components of the shadow economy in the country are unspecified incomes (42.1%), salaries in envelopes (40.2%) and illegal employment (17.7%).

According to official figures, over the past year, the country's GDP reduction was 3.8%. Its nominal volume amounted to 59.988 billion manats. Such a decline was due to a decline in production in the construction sector.

According to the Chairman of the Center for Sustainable Development Studies Nariman Agayev, whereas the volume of GDP for the past year amounted to about 60 billion manats, and up to 30% was in the shadow economy, it turns out that in our country about 20 billion manats is "in the shade." The current crisis, different in scale from the past ones, has embraced the shadow economy, where structural changes and centralization take place, while revenues in it are falling.

A large share of the shadow economy is due to the imperfection of the economic and tax system and monopoly. Experts agree that administrative measures and force intervention in the situation do not solve the problem. On the contrary, the situation may worsen even more. After all, the government is not able to offer alternative options to citizens and cannot develop a real economy in order to provide people with new decent jobs.

Meanwhile, the State Statistics Committee does not agree with the above data of both independent economists and the World Bank. The department told Contact.az that the share of shadow economy in Azerbaijan's GDP barely reaches 9% and this figure is much less than in the neighboring countries. Therefore, the situation should not be dramatized. There is a tendency to reduce the volume of the shadow economy.

Commenting on the current problem, the economist Samir Aliyev noted the imbalance between the budget and the economic potential of the country is the result of the shadow economy. To reduce the level of the shadow economy, it is necessary to improve the legislative base, expand the activity of e-government, and move more actively to non-cash payment. Certain steps are taken in this direction, but it is too early to speak about notable changes. The volume of non-cash settlements in Azerbaijan is only 7-10% of all calculations, while in some European countries it reaches 80-90%. In addition, it is necessary to accelerate privatization and develop the private sector, especially in the fields of transport and utilities.

According to the expert, large and small entrepreneurs, evading taxes, still create a large share of the shadow economy in the country, and this generates unequal competition and negatively affects the development of the economy as a whole. In the business sphere, it is necessary to break the myth that taxes may not be paid, and the state should show that taxes are spent efficiently and transparently. The share of the shadow economy needs to be assessed in the context of tax reform.

However, the problem of the informal economy is relevant not only in Azerbaijan, but also in the Baltic countries. An annual conference on fighting against the shadow economy was held in Riga these days. The statistics presented at the forum allows us to compare the scale of the shadow economy in different regions of Europe. So, in Lithuania, the shadow economy last year amounted to 16.5% of GDP, an increase of 1.5 percentage points. In Estonia, this figure was 15.4% of GDP, an increase of 0.5 percentage points during the year. This index is two times as high in Azerbaijan! So there is something to think about.--0--