Transition to non-cash payments in Azerbaijan to lead to GDP growth
Azerbaijan, Baku, April 21 / Trend /
Trend analytical center
Economists estimate that the acceleration of non-cash payments for one day gives an annual GDP growth of 1.5-2 percent. In particular, the decrease in cash in the economy leads to a reduction in the cost of cash maintenance, reduces the size of the shadow economy, tax evasion and promote the development of the banking trade.
The GDP growth in Azerbaijan for this indicator is expected in five years, as the country aimed at bringing cashless transactions in Azerbaijan to the level of the Baltic countries and Eastern Europe for over five years. If today's non-cash payments in the Baltic States amounts to approximately 45 percent of total turnover, then the figure in Azerbaijan is 3.5 percent. It is also planned to increase non-cash turnover by more than ten times.
At present, according to the Central Bank, the ratio of the mass of cash in circulation to the monetary base is 94 percent in Azerbaijan, which is one of the shortcomings of the monetary system of Azerbaijan. Thus, the amount of cash in circulation was estimated at 7222.3 million manat on February 1, 2012, that is 776 manat for each citizen of Azerbaijan. If the money were in the accounts of credit institutions, it would be a significant resource that could be spent on lending to the economy and individuals.
A state program to expand electronic payments in Azerbaijan in 2012-2016, prepared by the CBA will promote the gradual spread of non-cash payments in Azerbaijan. The main directions of the program is to expand the infrastructure for electronic payments, strengthen institutional capacity, increase efficiency, educate people, more active involve the population and economic entities in the use of these services.
Such areas as payment of taxes and state fees through the Internet in the frame of Electronic government project implemented by state agencies, broadening the range of electronic services offered by banks, the number of POS-terminals, the services offered by e-mail operator in the regions and rural areas are used to expand the coverage of non-cash payments.
Thus, the installation process of POS-terminals in the country became widespread. According to the Ministry of Taxes of Azerbaijan, in 2012, all trade and catering facilities in the central areas of Baku will be equipped with POS-terminals. Eleven districts of Baku were divided into 60 sections in 2012 in order to provide them with POS-terminals.
Total number of POS-terminals in Azerbaijan exceeded 20,000 on April 9, 93 percent of them (18 604) are operating in Baku. In particular, 9.3 times more POS-terminals are installed in the first quarter of 2012 than in the same period last year, including 4.6 times more - in the country.
If earlier it was possible to register 15-20 POS-terminals during one day, at the present time, this figure increased to 300-400 units. Also, in order to accelerate the process of registration of POS-terminals in conjunction with processing centers corresponding software is used, and POS-terminals are registered online.
Now installation of POS-terminals is being ensured throughout the country in hotels, facilities of trade, public catering, recreation and entertainment, taxis, gas stations and other facilities operating in the centers of the tourist map.
Gas stations began to use cash registers, excluding cases of filling oil and liquefied gas without providing receipts. The installation of such devices at 67.8 per cent of the existing gas stations in Azerbaijan has already been ensured. By late April installation of universal POS-terminals will end in 500 Baku London Taxis, through which settling using magnetic cards, chips and touch-type will be made.
However, to get closer to the leading countries in Europe, where the proportion of cash is only 3 percent of the money turnover, a number of incentive measures is needed. Tax and criminal laws, and, most importantly, the mentality of people should be changed since people do not want to replace the notes with the plastic cards, though the use of cashless settlement affects an increase in the level of financial culture of the citizens.
Experts are convinced that the growth of the share of cash payments will increase the transparency of the economy. All trade and service companies will be obliged to accept bank cards, and the population to actively use them. According to the Central Bank of the country, as of January 1, 2012 Azerbaijani banks issued 4.58 million units against 4.231 million units at the beginning of 2011. Last year 50.953 million operations with plastic cards at 7.23 billion manat were carried out in the country. In 2010 there were 46.504 million operations with plastic cards at 6.056 billion manat.
Another issue that prevents the full development of cashless payments is safety of use of plastic cards, the fear of "plastics" users, of the unauthorized withdrawal of money from the accounts. In this case, the State will have to legislatively tighten the responsibility for stealing money from the accounts of individuals and require financial institutions in all cases to compensate the losses.
With regard to changes in tax legislation to encourage cashless payment and cash handling limits by changing certain tax rates, as well as the issue of tax benefits, the Ministry of Taxes of Azerbaijan is already working on next amendment to the Tax Code, which, if approved at the spring session of Parliament, will come into force from January 1, 2013. In particular, it is possible in Azerbaijan to partially exempt from taxation turnover of businesses conducted in non-cash form. It is also proposed to introduce restrictions on the operations of buying and selling in a single transaction or for a certain period of time. For example, if within one month or within a single transaction the amount will exceed, for example, 5,000 manat, the transaction for the portion that exceeds this amount, should be conducted only in non-cash form.
Also, the Ministry of Taxes has launched a service on payment of taxes and state duties over the Internet. The service is available on the website of the Ministry and the Central Bank of Azerbaijan. This will be a powerful argument against shadow incomes and corruption. According to State Statistics Committee of Azerbaijan, the informal economy is at 18 per cent of GDP, but according to World Bank research on Azerbaijan this figure is 63.3 percent.
Of course, Azerbaijan in the future will fully switch to electronic payments - the whole world is gradually coming to it. It is only important to consider the principles on which cashless payments are based - they must be timely, uninterrupted, reliable, safe and economical.