State budget for 2021 to restore economic growth in Azerbaijan - CAERC's director

State budget for 2021 to restore economic growth in Azerbaijan - CAERC's director

BAKU, Azerbaijan, Jan.5

By Fidan Babayeva – Trend:

Azerbaijan is expanding the volume of the state budget in line with the global tendencies, Vusal Gasimli, Executive Director (CEO) of the Center for Analysis of Economic Reforms and Communications of Azerbaijan, said commenting on the country’s economic and social results in 2020, Trend reports.

According to Gasimli, public expenses in the developed countries in the 19th century amounted to 8 percent of GDP, while currently, this figure reaches 40 percent.

"In Azerbaijan, the share of state budget expenditures in GDP in 2021 is forecasted to make up 37.7 percent. Even the European Bank for Reconstruction and Development used the phrase ‘the state is returning’ in its report on transition countries," he said.

The CEO stressed that the main priorities facing the state budget in 2021 are the further improvement of the country's defense and security after the 44-day Patriotic War (from late Sept. through early Nov.2020, resulting in the liberation of the Nagorno-Karabakh region and 7 surrounding districts from Armenian military occupation), reintegration of the Karabakh region, restoration of economic growth and social welfare. Therefore, state budget expenditures in 2021 are projected at 28.5 billion manat ($16.7 billion), which is 16.9 percent more compared to the actual implementation of 2019 and 5.9 percent more than in 2020.

"Although the attraction of new income sources in the fiscal phase reduces the budgetary burden of the non-oil real sector, it increases the risks of servicing the public debt,” he noted. “However, if we consider that the ratio of public debt to GDP in Azerbaijan is 23.3 percent, which is 30 percent lower than that provided for in the strategy, in accordance with the current situation, the priority was chosen correctly.”

Gasimli emphasized that in accordance with the ‘rhomb of the fiscal phase’ of the International Monetary Fund, Azerbaijan in the future can better use the ‘fiscal phase’, moving towards increasing the efficiency of spending and mobilizing revenues.

“Forecasting the deficit of the consolidated budget and the state budget in 2021 with a current account surplus smaller than in 2020 creates fundamental foundations for the stability of the manat,” he added. “The main thing is to encourage the inflow of investments into the country through fiscal expansion and soft monetary policy, as well as a favorable business climate and incentives. The Karabakh development program will be financed not only by the state but also by international structures, banks, foreign and local investors, and other sources. State investments will play a stimulating role in this sense.”

The share of expenses related to the implementation of social policy in the state budget of 2021 is forecasted to increase by 7.8 percent and 0.2 percent, respectively compared to the corresponding indicator of 2019 and 2020. In particular, the social package for the families of the war martyrs and invalids will be significantly expanded, the director summed up.

(1 USD = 1.7 AZN on Jan.5)

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Follow the author on Twitter: @Fidan_Babaeva

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