Azerbaijan, Baku, November 16 / Trend, A. Akhundov /
The financial capabilities of Azerbaijan allow it to have a no-deficit budget. However, it is essential to keep a deficit to provide stability in the country's financial system, Samir Sharifov, Finance Minister of Azerbaijan, reported.
He was speaking at a discussion of the draft of state budget and consolidated budget-2012 and of state budgets for a further three years at a joint meeting of the Parliament's Committees on economic policy, social policy, defence and security, natural resources, energy and ecology, and agrarian policy on Wednesday.
"We need to have a state budget deficit as it is one of the important elements for the financial system and primarily the banking system and insurance companies because the state issues securities to give banks the opportunity to place extra liquidity into them. Unlike other countries we do not increase the budget deficit from year to year neither do we top it up with the money we earn from these investments," the Minister noted.
He says countries which once covered different budget expenditures mostly through issuing new money, now seem to have problems.
"We do not follow this path and we try to make our budget expenditure go hand in hand with revenue. Along with that we should take a certain budget deficit into account," Mr Sharifov noted.
He said the existing state budget deficit of Azerbaijan can be covered by earnings from either the domestic or foreign market.
"We permanently express the necessity of making use of placement of our debt instruments on foreign markets and this is annually laid in state budget as one of the sources of deficit coverage. However, we watch the situation on international markets. Our credit ratings get upgraded and we have already had the required ratings to enter international markets," the Minister said
The market situation today is inappropriate for borrowing. "In large countries, for example Italy, interest rates of borrowing has increased considerably. We try to take this situation into consideration when we set our financial plans," the Minister added.
Rufat Aslanly, Chairman of the State Securities Committee of Azerbaijan, told the Parliament's meeting that in the first nine months of 2011 the Finance Ministry placed, for reasons of provision of state budget deficit, securities worth 203 million manat, with the remainder equivalent to 108 million manat today, an increase of 17 per cent against the respective period of last year.
"No assets from the placement of state debt instruments abroad have so far been transferred to the state budget," Mr Aslanly said.
He noted that the Government of Azerbaijan continues to reduce the limit of borrowings.
"In 2010, the limit was equivalent to 4.2 billion manat, including 1.7 billion manat as the limit for internal borrowings and the figure is expected to be 3.5 billion manat (1.2 billion manat) and 3 billion manat (1 billion manat) in 2011 and 2012, respectively", Mr Aslanly said.
The official exchange rate on November 16 is 0.7866 AZN/USD.