Growth of Investments into Azerbaijan’s Infrastructure Led to Budget Gap

Business Materials 27 March 2007 17:54 (UTC +04:00)

Azerbaijan, Baku/ Trend corr. I. Khalilova / The state investments into Azerbaijan's economy in 2006 increased by 49 and reached $3.5 bln., Trend reports quoting the review made public by the Asian Development Bank (ADB) for 2007 called "The Development of Asia. Growth and Changes".

An integral part of them (75 percent) put by state-sector enterprises, with 12 percent falling at the State Budget, and 8 percent - on commercial banks operating in the country.

On the whole, the expenditures of the State Budget in 2006 increased by 67 percent and were spent on paying the wages of state sector employees, pensions, benefits, social allowances, social protection, defence, and development of the infrastructure in the country.

At the same time, the tax returns to the State Budget increased by 80 percent, particularly at the expense of the oil and gas sector. About one thirds of the budget revenues fell at SOCAR (State Oil Company of Azerbaijan), 17 percent - on transfers from SOFAZ (State Oil Fund of Azerbaijan). The budget deficit reached 3.3 to GDP due to the increase in putting investments to the infrastructure. To the end of 2006, SOFAZ had accumulated $1.8 bln.

Despite the increase in budget expenditures and money supply (М2 grew up by 87 percent, the reserve funds - by 30 percents, and М1 - 145 percent), the average official consumer inflation in 2006 reached 8.3 percent.

"However, independent analysts suggest that the growth of the index of consumer prices is much more than everybody considers," the review says.