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Amendments to Azerbaijan's 2011 state budget stipulate increase in income by 29 percent

Business Materials 20 May 2011 17:50
The bill 'On amendments to the Law on Azerbaijan's state budget for 2011' was introduced to the Azerbaijani Parliament for discussion this week, the Azerbaijani Finance Ministry reported.
Amendments to Azerbaijan's 2011 state budget stipulate increase in income by 29 percent

Azerbaijan, Baku, May 20 / Trend N.Ismayilova /

The bill 'On amendments to the Law on Azerbaijan's state budget for 2011' was introduced to the Azerbaijani Parliament for discussion this week, the Azerbaijani Finance Ministry reported.

"The budget projections are adjusted under Azerbaijani President Ilham Aliyev's instructions to create additional financial support for activities to strengthen the social protection of population, primarily with a view to continue reforms in the pension system and raise salaries of employees of the budgetary institutions, social allowances, stipends and other social benefits, as well as fund a number of investment projects in the social and infrastructural sectors," the report indicated.

Funding these activities and projects is estimated at 3.1 billion manat. Opportunities of the world oil market remain favorable, due to which the cost of one barrel of Azerbaijani oil exceeds the price set at the state budget for 2011 by more than 80 percent.

Thus, additional revenues of the State Oil Fund of the Azerbaijan Republic totaled 976.4 million manat in the first quarter of 2011 compared to 193.5 million manat projected earlier.

Given the positive situation on the world oil markets, the State Oil Fund expects additional revenue due to price differences in the draft state budget approved in 2011. The oil price is set at $80 compared to the previously approved $60 in the draft state and consolidated budget presented to the parliament.

The bill proposes to increase state budget revenues by 3.493.2 billion manat, which means a 29-percent increase in revenue compared to the forecast - up to 15.554.2 billion manat. The growth in the state budget revenues will be achieved through increased tax and customs revenues by 770 million manat, and by 2.7 billion manat through transfers of the State Oil Fund.

Budget expenditure is projected at 15.941.2 billion manat with a 25 percent increase (3.193.2 billion manat) compared to the draft state budget approved in 2011. After increase in the budget expenditure, operating costs of the public budget will comprise 7.716.5 billion manat (48.4 percent of total expenditure), capital expenses - 7.878 billion manat (49.4 percent), the costs associated with servicing debt - 346.7 million manat (2.2 percent).

Thus, 66.3 percent or 462.7 million manat of 698 million manat provided for the increase in operating costs, will be spent on implementation of pension reforms and financing costs associated with an increase in social benefits and pensions.

Some 77.8 percent or 2.484.1 million manat of the amount for additional increase in the expenditure fell to the state capital investments, which is 73.5 percent more than the expenditure approved for these purposes.

These funds are provided to fund the refurbishment and building work in schools, construction of dormitories for students, implementation of gasification programs in the country, improvement of electrification in the country, construction and reconstruction of water and sewage systems, implementation of state program on development of Baku and its settlements, construction and repair of roads and construction of fertilizer plant in Sumgait.

It is planned to cut by 300 million the budget deficit, which set at $687 million manat in the 2011 state budget, through additional income. After revising the state budget, the ceiling of the budget expenditure is projected at 18.634.3 million manat and consolidated budget surplus - 1.368.5 million manat.

The official exchange rate is 0.7902 manat to $1 on May 20.

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