Thanks to high oil prices, state budget revenues will increase by 8.9%

Baku/22.06.22/Turan: The Azerbaijani government is changing the state budget for 2022. The draft law of the Republic of Azerbaijan On Amendments to the Law of the Republic of Azerbaijan "On the State Budget of the Republic of Azerbaijan for 2022", which will be discussed in the Milli Majlis, proposes to increase the forecast oil price in the budget from $50 to $85 per barrel. A barrel of Azerbaijani oil currently costs over $120.

On the other hand, in the document, where expenditures were increased by almost 3 billion, social expenditures were increased by only 519 million manats. Member of the Milli Majlis Committee on Economic Policy, Industry and Entrepreneurship Rufat Guliyev told Turan that the price of oil included in the budget is only a technical parameter. “In any case, this money goes to the Azerbaijani economy. They either go directly to the budget or go to our gold reserve. If necessary, this money is transferred from the reserve to the budget.

The committee member noted that there are priority areas. "This is a further increase in defense capability and military power, restoration and reconstruction of territories liberated from occupation. Tens of thousands of manats a day are spent on clearing territories of mines. Infrastructure projects are being implemented for a large return. One of the most important areas is to improve the well-being of the people."

According to him, the state budget of Azerbaijan has always been socially oriented. "At least 37% of the budget goes to social spending. Looking at it from a pragmatic point of view, I think this distribution of additional funds is correct. Because there are priorities. We all understand very well that we must act cautiously and build up defense capabilities until the issue with our notorious neighbor will not be resolved, that is, until a peace treaty is signed, the delimitation of borders will not be carried out.”

Economist Gubad Ibadoglu said that no funds were allocated from the consolidated budget to increase pensions, benefits, salaries. “According to the updated forecasts of the approved state budget of Azerbaijan for 2022, revenues are set at 29 billion 197 million 800 thousand manats, expenses - 32 billion 303 million 800 thousand manats. Thus, compared to the previous budget forecast, revenues will increase by 2 billion 381.8 million manats or 8.9%, and expenditures by 2 billion 424.8 million manats or 8.1%.

He noted that the defense and investment budgets account for the largest share in the growth. “With an increase in spending on defense and national security by 13.2%, and spending on reconstruction and restoration of territories liberated from occupation by 21.4%, spending on social protection and security - by 2.4%, spending on education - by 0 .6%, health care costs have been reduced.”

According to the expert, such a division actually indicates the priorities of the Aliyev regime. “If there were transparent and accountable spending, I would not be against an increase in defense and national security spending, as well as funds allocated for the restoration and reconstruction of territories liberated from occupation. However, it should be taken into account that the funds allocated for these areas increase the scale of corruption and serve its development.”

He noted that despite the consumer price index in January-May 2022 compared to January-May 2021 amounted to 112.6%, the last time wages, pensions and benefits were increased in January of this year, taking into account inflation of the previous year. "But how to cover the costs due to the ongoing high inflation this year? As I said earlier, unfortunately, this time the Aliyev regime did not allocate funds from the increased state budget to the socially needy, preferring sectors with high corruption potential. And this means that the robbery of the budget continues on a larger scale and faster than ever.”

According to the economist, the rise of corruption in the field of defense and national security, under the guise of reconstruction and restoration of the liberated territories in Karabakh, is of particular concern here.

As for the price of oil indicated in the budget, the expert said that such a large difference between the forecast price of the budget and the actual price of oil today is the result of unprofessionalism.

On the other hand, forecast oil prices in the budget have a greater impact on the budget of the State Oil Fund, he said. “Since the main oil revenues to the budget of Azerbaijan come from the Oil Fund, and it is managed by stable transfers, this is the budget of the Oil Fund, and not the state budget, which benefits from the difference between forecast and actual indicators. The state budget earns only when local and foreign oil and gas companies increase income tax payments. Because when oil prices rise, they pay more income tax.”—0—