Azerbaijan's parliament receives number of laws recommended for amendment

Economy Materials 23 September 2022 16:54 (UTC +04:00)
Azerbaijan's parliament receives number of laws recommended for amendment
Elchin Mehdiyev
Elchin Mehdiyev
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BAKU, Azerbaijan, September 23. Draft laws 'On amendments to Laws', 'On unemployment insurance and 'On Chamber of Accounts' were submitted for the discussions in Azerbaijani Milli Majlis (Parliament) Committee on Economic Policy, Industry and Entrepreneurship, Trend reports.

Amendment to the law 'On budget system' was prepared with the aim to implement the law No. 440-VIGD of December 24, 2022 (hereinafter referred to as the Law).

The Law determines that extra-budgetary funds can also be established as targeted state financial funds that have cash, without creating a legal entity. Income and expenses of the fund for ensuring obligations on the state debt and guarantee are excluded from the consolidated budget.

The article regulating the budgetary rule by the said Law has been amended. According to the new edition, in the medium term perspective, it's established that the ratio of the non-oil base deficit of the consolidated budget to non-oil GDP and the ratio of public debt to GDP can't exceed the upper limits set by the president of Azerbaijan, and these upper limits should be calculated based on the export price of crude oil, established by the Cabinet of Ministers of Azerbaijan.

The article regulation documents prepared together with the draft law of state budget and presented in Azerbaijani Parliament (Milli Majlis) excludes the total financial balance on the territory of Azerbaijan and comparison of revenues and expenditures for the next budget year with the actual results of the previous year and the expected results of the current year (according to the classification of income, at the paragraph level of the functional, economic and organizational classification of expenditures), and other changes are made to this article.

Monthly reports of budgetary organizations and organizations receiving financial assistance from the state budget on the use of these funds are cancelled. The State Debt and Guarantee Obligations Fund is defined as an independent extra-budgetary fund without the formation of a legal entity.

A number of amendments are made to the article regulating the relationship between the state budget and state non-budgetary funds. The management of state extra-budgetary funds, the use and accounting of their funds are determined in accordance with laws and other regulatory legal acts regulating the activities of state extra-budgetary funds. The implementation of coordination of operations on the preparation, execution and control over the execution of the state budget, budgets of state extra-budgetary funds through the action plan refers to state extra-budgetary funds, provided for in Article 1.1.31 - 1 of the Law of the Republic of Azerbaijan (hereinafter - the Law) 'On budget system'.

It was also established that the upper limit of expenditures of state off-budget funds established without the creation of a legal entity cannot be higher than the balance of these funds at the beginning of the budget year and the amount of funds received during the year, and that annual reporting on their financial operations isn't submitted together with the report on the implementation of the state budget.

The mentioned amendment created the necessity to remove inner contradiction in the Law, making the following change 'On unemployment insurance' and 'On Chamber of Accounts'.

In connection with the exclusion from Article 12 of the Law of the total financial balance for the territory of the Republic of Azerbaijan (12.1.9), at the suggestion of the Ministry of Finance, which prepared this document, the Law provides for the exclusion of the concept of 'total financial balance' (Article 1.1.22). According to Article 27.2 of the Law, when expenses of state off-budget funds are included in the expenses of the consolidated budget, operating expenses of the State Oil Fund and expenses related to the placement of funds in international banks and other financial institutions are excluded. This circumstance creates the need to exclude the last item of expenditure, as it contradicts the recently introduced article 1.1.31-2.

The amendment in the articles 15.4 and 19.4 of the Law are aimed at clarifying the wording and eliminating the contradiction with Article 22-1.3 of the Tax Code of Azerbaijan. In accordance with Article 27.5 of the Law, the forms of reporting on income and expenses of state extra-budgetary funds, provided for in Article 1.1.31-1 of the Law, and the frequency of their submission are determined by the Ministry of Finance, taking into account the opinion of the Chamber of Accounts and state extra-budgetary funds.

These extra-budgetary state funds publish these reports in the press once a quarter, with presentation to the head of state, the Ministry of Finance and Chamber of Accounts. For the avoidance of contradiction, the State Social Security Fund and the Unemployment Insurance Fund are excluded from Article 27.9. Taking into account Articles 1.1.5, 1.1.31-1 and 1.1.31-2 of the Law, it is proposed to amend Article 20.1 of the Law "On Unemployment Insurance" to accurately reflect that the Unemployment Insurance Fund is a state non-budgetary fund established without education legal entity.

According to the change in Article 27.7, Chamber of Accounts gives an opinion only on draft budgets of state extra-budgetary funds provided for in Article 1.1.31-1 of the Law 'On budgetary system', and annual reports on the execution of these extra-budgetary state funds. With this in mind, amendments to the law 'On Chamber of Accounts' are proposed.

After discussions, the draft law was recommended for consideration at the plenary session of the Parliament.

Moreover, the new edition of the Law provides the concepts of budget loans, the upper limit of the expenditures of the consolidated budget, the non-oil base deficit of the consolidated budget and the medium term prospect.