Baku, Azerbaijan, November 23 / Trend /
Ellada Khankishiyeva, Trend Analytical Center Head
The problem of effective control of state expenditures has always been urgent for independent Azerbaijan. International organizations, since they came to the country, staked basically at the strengthening of institutional bases, revision of old legal provisions and adoption of new ones. It has to be recalled that the IMF from the very beginning expressed its deep concern over Government's rather "impudent treatment" of revenues accumulated at the State Oil Fund of Azerbaijan (SOFAZ). As then viewed by the IMF, oil export revenues should have served as a wealth for the next generations and never be spent for refugees and infrastructural businesses.
However, firmness of the Government, which thought problems of refugees were of paramount importance and so was the construction of oil pipeline Baku-Tbilisi-Ceyhan, led to that the IMF refused to assign another loan to Azerbaijan for struggle with poverty. Compromise was found after the IMF in a rather strict form demanded from the Government that the state budget should be inclusive of all expenditures of non-budgetary funds, including the SOFAZ.
The time when the Azerbaijani Government had to do something upon dictation of international organizations is now left behind. Certainly, following the inflow of oil export revenues to the country, the problem of state finances has become principally important for the community so the Government makes particular efforts to provide enough transparency in this issue.
An illustrative example is the annual growth of state budget and SOFAZ budget. The assets of the SOFAZ increased by 41.6 per cent against $22,766.8 million in the beginning of the year to $32,242.5 million on October 1, 2011. The assets of the SOFAZ, at the date of its establishment, were equivalent to $271 million.
Azerbaijan's state budget-2012 revenues and expenditures are forecasted as 16,436.4 million manat and 16,984.4 million manat, respectively. For comparison: state budget-2003 revenues and expenditures were equivalent to 1,226 million manat and 1,234 million manat, correspondingly.
At the moment, large-scale revenues really need to be controlled in a reliable way.
Having joined the Extractive Industry Transparency Initiative (EITI) in 2003, Azerbaijan made a big step toward the reputation of transparent country. Increase of the level of transparency and awareness of oil export revenues will allow citizens and organizations to control Government's actions. This will complicate abuses and use of money for purposes not relating to the provision of sustained development. As supposed, companies will only win from more equal economic relations, more predictable conditions of economic activity, and possibility of a more efficient provision of energy security. Inter alia, today, not all oil and gas companies operating in Azerbaijan issue their reports separately as they consider it a commercial secret, disclosure of which would violate contractual terms.
In 2009, the Central Bank of Azerbaijan established a Financial Monitoring Service, which is the central body in the field of struggle with the financing of terrorism and money laundering. The Service this year has become the full member of Egmont Group, an organization resembling Interpol but specialized in the field of financial relations. Egmont Group has established its news center under the name of "Egmont Security Network". Some 60 countries-members of the organization exchange information of suspicious financial operations and ways of legalization of criminal incomes, and counteract jointly their across-the-border trafficking. In October 2011, the Financial Monitoring Service received 21,398 data relating to suspicious and current operations.
A more important aspect of evolution of financial control system is bill entitled "On State Financial Control", which has not yet become the law. It is essential to pass this law to increase transparency of the system of state budget forecasting and performance, and tighten control of budgetary spending. Second, the bill specifies issues of state financial regulation and a stricter division of powers amongst state financial control bodies.
As is known, financial control in Azerbaijan is currently subdivided into internal control and external control with the Finance Ministry and the Accounting Chamber, an independent state financial control body, responsible for them, respectively. Their key task at the moment is to improve the efficiency of state financial control actions and avoid unnecessary dubbing of financial-control activities.
Worthy of a note is the operation of the Azerbaijani Accounting Chamber, which, as an independent financial control body, is specialized solely in checkup of state expenditures. The Chamber submits its annual report to the Parliament traditionally in May. As viewed by foreign consultants, the very practice of Chamber's report examination in the Parliament is legally not irreproachable and is not complied with the Rome Declaration's provisions on independency of high state audit body.
Efficient financial control of state expenditures is the most important factor of strengthening of public trust in state power, and consolidates power and the society in achievement of the common goal: the provision of wealth of citizens and stability of state power.