Revenues, expenditures of Azerbaijani state budget for 2016 to increase (UPDATE 3)

Baku, Azerbaijan, Jan. 24

Revenues and expenditures of Azerbaijani state budget for 2016 will increase, said the country's Finance Minister Samir Sharifov in an interview to ANS TV channel.

He said the revenues will be increased by 1.9 billion manats (to 16.4 billion manats), while the expenses will be increased by 1.95 billion manats (to 18 billion manats).

"The deficit of the state budget is forecast to be at 1.5 billion manats," Sharifov said. "The main sources of covering the budget deficit are the savings at the end of last year, 1.4 billion manats, as well as the manat bonds, which are planned to be released on to the market this year."

Budget forecasts are prepared taking into account the oil price at $25 per barrel.

The Minister noted that the reason for amending the budget is adjusting the exchange rate of manat.

"Another cheapening of manat in December 2015 made a number of changes in the budget forecasts necessary. First of all, expenditures of the country denominated in foreign currencies increased. This is the cost of external debt management, financing of our diplomatic missions abroad, the payment of membership fees to international organizations and also implementation of our other foreign currency liabilities. All these costs should be reflected in the state budget with consideration of new AZN to USD exchange rate", he said.

In addition, according to Sharifov, in connection with the devaluation of the manat inflationary pressures, raising a number of prices observed which made it necessary to increase the number of social benefits.

"The President has already issued a number of decrees and orders to increase social benefits and salaries. It is expected in the near future to sign several orders - to increase unemployment benefits, scholarships and for a number of other social measures. There must be some funds in the state budget for all these, but they are not included among the approved last year", Sharifov added.

He also noted that it is planed to allocate more than one billion manat in order to increase social benefits and salaries.

The minister said that another reason for a revision of the budget forecasts was decrease in revenues from some sources.

"Deductions for income tax from the oil consortiums operating in Azerbaijan decreased due to lower oil prices. In the budget for 2016 the oil price was taken into account at $50 per barrel, now during the revision, it will be considered at a rate of $25 per barrel, while some predict that in the second half of the year, oil prices will rise. Thus, our oil revenues will decrease, but, despite the fact that some of them in dollars and we will increase revenues in manat equivalent because of the devaluation, contributions from the oil consortiums and SOCAR (State Oil Company of Azerbaijan) to the state budget may be reduced by 200 million manat", he said.

He also said that in the updated state budget revenues by the Ministry of Taxes and the State Customs Committee also revised.

"It is also primarily related to the devaluation of manat, prices in manat equivalent for certain categories of products that were being imported to the country have increased. At the same time, the devaluation could create inflation, and, taking this into consideration, we expect an increase in revenues through the Ministry of Taxes. Also, it should be noted that the size of transfers to the budget from the State Oil Fund (SOFAZ) in manat equivalent increased by 1.2 billion manat. Thus, we can balance the revenues and expenditures of the state budget", the Minister said.

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