Azerbaijan's purposeful economic policy allowed keeping 2009 budget deficit at 0.5% of GDP

Azerbaijan, Baku, May 20 / Trend I. Khalilova /

The state and consolidated budget of Azerbaijan in 2009 was executed in the volatile situation in the context of the global financial crisis, Finance Minister Samir Sharifov said while discussing the report "Execution of the state budget-2009" at a meeting of the parliamentary committee for economic policy.

The world financial crisis began in 2008 in leading financial centers. It covered the entire world economy by exerting a negative impact on global trade, passenger and freight traffic, the financial and investment flows in 2009. It reduced lending capacity and led many countries, including major developed countries to economic stagnation", minister said.

He said that the wave of the crisis covered the countries of the region, which includes Azerbaijan. Deterioration in economic conditions, decline in GDP and incomes, the rate of national currency, limiting of the possibilities of attracting investments and loans, and rising of inflation were observed.

"The negative impact of the global crisis was demonstrated in Azerbaijan by decrease of value of exported goods from the country, oil production from the Azerbaijan International Operating Company", Sharifov said.

AIOC's oil production redcued compared to the projected figure at 32.1 percent or 12.9 million tons. Beginning from the fourth quarter of 2008, and in particular the first half of 2009, the outflow of foreign investment was observed. About $250 million, or 60 percent of the total market were seized from the market of governmental bonds, the banking sector - $1,7 billion ( 20 percent of foreign exchange assets), minister said.

"Despite the unacceptable foreign climate, thanks to carefully thought-out, restrained, however, sufficiently strong and flexible economic policy, the country was able to successfully eliminate the negative effects of the crisis", Sharifov said.

Even by the end of 2008, the government of the country, taking into account the negative consequences of the crisis, begun to implement measures aimed at social protection of the poor people and preserving production at a stable level, and the medium-term activities for the prevention of future impact of the crisis.

The minister said as a result of the undertaken measures, the country's public budget in 2009 was executed with a deficit of 177.9 million manat compared to the forecast of 178 million manat.

"During crisis, many countries are trying to reduce the budget deficit to 7.8 percent of GDP, while in Azerbaijan the figure was 0.5 percent, said the head of the Accounting Chamber of Azerbaijan Heydar Asadov. The budget deficit was covered by revenues from privatization and income from the sale of state bonds."

In 2009, the Public budget income comprised 10,326 million manats compared to projected 12,177. This index decreased by 4.1 percent, compared to the same period in 2008, and the budget revenues was fulfilled by 84.8 percent.

Public budget expenditures decreased by 1.9 percent and made up 10,567 million manat (compared to projected 12.355 million manat and the performance of 85.5 percent). The surpluses of the budget totaled 241.1 million manat.

The Taxes Ministry remitted 39.8 percent of all income, or 4114 million manat to the Public budget. The State Customs Committee remitted 1113 million manat (with a special weight of 10.8 percent) in taxes and duties to the public budget, with an increase of 0.2 percent compared to 2008. The State Oil Fund (SOFAZ) remitted 47.6 percent of all income, or 4915 million manat to the Public budget, with an increase of 29.3 percent compared to 2008.

In 2009, 30.9 percent of tax revenues to the state budget (1273 million manat) was obtained at the expense of income tax transfers from SOCAR (State Oil Company), and 12.5 percent or 513.2 million manat - Azerbaijan International Operating Company (AIOC).

Compared to 2008 SOCAR revenues decreased by 1.2 percent or 15.8 million manat and the AIOC - to 76.1 percent, or 1.6362 billion manat.

In this period a total of 2327.7 million manats or 56.6 percent of the tax incomes was obtained from the oil revenues, which is less by 24.2 percent than projected and higher by 3.1 percent (70 million manat) than the index in 2008.

In 2009, the public budget expense for social security and provision of people comprised 1054.4 million manats, 1147.9 million manat was spent on education, 402,4 million - health, 648.9 million - maintenance of prosecutor bodies, security and law-enforcement and court bodies, 1183.9 million - defense, 194.5  million - housing and communal services, 390.4  million - agriculture, fishing, 75.3 million - transport and communications, and 146.3 million manats of Public expenses were spent on the economic activity.

In 2009, 2.763 billion manat (26.2 percent of total expenditure) of Public expenses were spent on the implementation of socially significant events, which is 19.5 percent or 450.4 million manat higher than in 2008.

Official rate on May 20 is 0.8036 AZN/USD.

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