Rapid Rise in Azerbaijan’s 2008 Public Budget Expenditures May Have Negative Effect – Expert (video)
Azerbaijan, Baku / Trend / Azerbaijan's 2008 public budget is impressive with its imposing parameters. No country is likely to have such a high rise in its public budget within one year.
The project of the public budget forecasts an income of AZN 7.38bln (27.9% increase), AZN 8.51bln of expenditures (34.7% increase), and AZN 1.12bln of surplus.
The rapid increase in public budget expenditures causing the deficit to double from 2007 can negatively affect Azerbaijan in terms of inflation. With the price of oil at $50 per barrel, which was planned in the 2008 public budget, and taking into consideration the world's oil prices, the public budget will inevitably have incomes not provided with economic growth.
Another source of the rapid budget rise is a double increase in transfers received from the State Oil Fund. These transfers will make up AZN 1.1bln (AZN 585mln in 2007). Such a rapid increase in transfers is destabilizing.
Current expenditures will make up AZN 4.737bln or 53.7% of the total expenditures. Main expenditures will account for AZN 3.688bln (43.3%). Payment of credits and interest rates will comprise AZN 84mln (1%).
The specific weight of society-targeted expenditures will rise by 26.5% compared to 2007 (AZN 584mln) comprising AZN 2.78bln (32.7%).
A 30% increase in social expenditures will be enough to affect the consumer market, inflation, and the population's real incomes. Although the 2008 budget is capable of unprecedented investment opportunities, it is too strained from the standpoint of inflation and its negative consequences on the economy.
(Ellada Khankishiyeva - expert at Trend Agency)