Azerbaijan, Baku /corr. Trend S.Aliyev / Organized by the Fund for Assistance to Entrepreneurship and Development of Market Economy through the support of USAID and US Eurasia Fund, a meeting took place in Baku on the topic of 'Oil revenues and institutional reforms' on 12 July. Making a speech at the meeting, the Director of Public Finance Monitoring Centre (PFMC), Inglab Ahmadov, said that there are high economic risks in countries with high oil revenues. "The normative-legal base is not improved, there are problems in effective and transparent use of the budget funds, and unnecessary expenditures," he said.
According to the data of the International Monetary Fund, in 2012 the GDP in Azerbaijan is forecasted at the level of $51bln. The IMF suggests spending less, and transferring more finances to the State Oil Fund. As a result, the assets of the Fund in 2012 may amount to $82bln.
According to Ahmadov, the assets of the Fund may total $36bln in 2010. But the State budget of the Country will amount to $8.4bln. "It will again show how the oil revenues will affect the budget," he said.
In addition, countries with huge oil revenues incur a number of risks which include foreign risks (linked with conjuncture), operational risks (particularly linked with unbalance between enterprises), financial risks (which may be linked to an over-increase in expenditures).
"In addition, there are the problems of budget surpluses for such countries. In case of a successful conjuncture, the budget is implemented with surpluses. It may bring harm to the tax system. Such problems are observed not only in Azerbaijan, but also in Kazakhstan and Russia," Ahmadov said.
According to him, further there are management problems. There are oil stabilization funds in many oil countries, including Azerbaijan, which incur the problems of accountability, responsibility and transparency.
One regulating body should function in the internal economy. This role in many countries is played by the budget committee and State renders all kinds of assistance to it. In Azerbaijan there is the State budget, the budget of Oil Fund, which is also of significance, and the budget of the State Oil Company, which carries out its own social programs. According to Ahmadov, weak coordination is observed here.
"It is difficult to regulate macroeconomic stability and control expenses of several organizations immediately," he said. One of the negative factors is that the oil revenues are not properly specified in the budget of Azerbaijan.
According to the PFMC Director, firstly it needs to hold legislative reforms, make amendments to the Law on Budget and Law on Accounting Chamber.
"The reformation should also be implemented in the governance system. It needs to accelerate the transition of the State enterprises into international governance standards. There is a necessity to reconsider the classification of the budget and strengthen staff policy," he said.
According to Ahmadov, it urgently needs to unify the forecasted base between the Ministries of Finance and of Economic Development, the National Bank, and the State Statistics Committee.
"Moreover, it is significant to establish a special Economic Security Council at the President of Azerbaijan," said the PFMC head.
