ENCOURAGING BUDGET OF STATE SOCIAL SECURITY FUND

As of last data over the project on technical assistance to the development of leasing activities in Azerbaijan (ALDP), the leasing portfolio of the country comprised $39.4m with a total 471 projects on 31 March 2006.

For Azerbaijan the figure is too impressive, as in 2004 the leasing sector of Azerbaijan was in the process of establishment. Over 2 years the number of leasing companies rose a little. To date the companies AtaLizinq, Azerilizinq, AG Lizinq, Azerlizinq, Gunaylizinq, UluxanlД±, Texnika Lizinq, Parex Lizinq and Uni Lizinq carry out active leasing activates in the country. The number of operators of the leasing market in the country continue increasing and today talks with the newly established leasing companies and leasing departments of the commercial banks are underway.

In January 2005 at the initiate of leasing companies AtaLizinq, UniLizinq and MuganLizinq with support of the project on development of leasing in Azerbaijan, implemented by the International Financial Cooperation (IFC), there was established the Association of Leasing Companies. The Association targets cooperation with all leasing participants, producers and manufactures of equipment, as well as local and foreign investors.

Leasing is a substantially new financial source for stimulating investments in the Azerbaijani economy. Today the capacities of the international leasing as a form of conduct of leasing operations is comfortable for local entrepreneurs in the implementation of a mechanism on attraction of foreign investments to major capital of their enterprises.

If to appeal to experience of European countries, with request to unify and optimize the operation linked with international leasing, big companies unite within leasing clubs or associations. These organizations are the manifestation of original cooperation in the sphere of leasing. Along with these functions, they are also used as a mean of implementing subleasing deals on leasing passing the borders. So, they search partners from the club in the country the easing is delivered.

Such leasing clubs are widely spread. For instance, there is InterLease in West Europe with participation of leasing companies of the UK, Belgium, Denmark, Netherlands, Italy, Norway, France, Germany, Switzerland and Sweden; "Lease-Club", which unites leasing companies of European counties and one Australian company; "LeaseEurope", uniting national leasing association of Europe.

Last week the changes and supplements to the 2006 budget of the State Social Society Fund (SSSF) has been confirmed at the presidential decree. In accordance with the changes and supplements to the budget expenses were increased 21.24m manats and comprised 589.5m AZN. If the major reason for injection of supplements of the public budget was linked with the increase of the oil revenues, the rise in budget of the fund was linked with the increase of the salaries in the budgetary organizations, as well as rise in the number of the insured people who were in connection with the application of the individual account system.

The Fund plans to obtain additional revenues from the social-insurance payments. The forecast obligatory state social insurance increased 5.3% and will comprise 421.98m manats. 11.2m manats, or 52.9% of revenues receives at the expense of obligatory state social insurance fell on the budget sector, 10m manats, or 47.1% -non-budgetary sector.

Expenses of the fund in 2006, as it was indicated above, were 21.2m AZN more than the previous indices. 85.4%, or 18.1m manats will comprised of payments by population, which finally equal to the sum at 552.65m manats. 529.5m manats, including basic part of labor pensions (439.5m manats), is directed at payment of pensions.

As compared to last year in 2006 the total amount of pensions in increased from 35m to 44.3m manats, 24%. It was possible due to rise in basic part of pensions to 30 manats in April. From October 2006 the minimal pension rates will be increased to 35 manats, while from 1 January 2007 to 40 manats. Finally, it is planned to increase it to the minimal living subsistence, which will reach 55 manats in 2008. This year the social payments to low-income families, including shehid families, war and labor veterans, are expected to increase.

Thus, over 2-3 years the basic part of labor pensions will be increased to minimal living wage, while over the subsequent 7-9 years there will be an opportunity for application of the system on accumulative part of pensions. Finally, the public budget transfers to the budget of the SSSF will be decreased to the minimal. In this period the accumulative system will be self-reimbursing and there will appear new sources of financing.

The commencement of discussions at the parliament over the draft law on Insurance of physical entities savings was a bold step in the establishment of pension funds, Salim Muslimov, the chairman of the SSSF, said that the insurance of savings at the private funds should find its reflection in a relevant law, which could light green to establishment of private pension funds.

It is possible to assert that the budget of the SSSF will be developed in accordance with the pension system of insurance, which envisages the organization of pension provision starting from 2006 in accordance with the new principles. Since January 2006 the country applied a new pension system, based on personification system of social insurance calculation. However, the correction of the budgets fund was necessitated by the third reason.

Thus, the adoption of the law on Labor pensions was expected to occur early 2006, while the document was delayed and adopted only in March. Absence of the law made questionable the issue on financing the social security of the definite category of citizens with the number of 34,000 people not having necessary work experience to receive labor pension. To have the respective rights a citizen should have as minimum 5-year work experience. Moreover, part of these citizens are the disabled, which got injuries the military service. This category will be granted with special status equal to those that the social pensioners enjoy. Till the beginning of this year they received minimal pensions like the labor pensioners. Though the last year budget of the SSSF did not stipulate funds in this respect, the Fund, nevertheless, carried out financing. Thus, part of the increased expenses of the SSSF will be directed at financing the payments for this category of citizens.

Definite part of renewed expenses 594,000 manats will be directed at the implementation of measures directed at social security of the disabled in the regions. Considerable funds will be directed at financing the continuing pensions reforms in the country.

In accordance with the new principles of the pension reforms, new pension dossiers were filed on every of 1,180,000 pensioners. The relevant documents were submitted to the local branches of the Ministry of Labor and Social Security.

By December 2006 it is planned to complete a process on issue of certificates on obligatory social insurance. As of 1 June the SSSF developed documents for issue of certificate for 860,300 people. The certificates for 844,700 people are also under printing.

Work on completion of the process of formation of the logistics and software for transition to the personification system of calculation of social insurance. In particular, by the end of 2006 the SSSF plans to complete the construction of a building for 24 district branches of the Fund. Moreover, 13 local branches more will be renovated by the end of the year. The local branches of the Fund will receive 1600 computers, which will enable to provide every employee of the SSSF with a computer.

So, the pension reforms in Azerbaijan is going in its pace, sometimes being behind and sometimes ahead of the CIS countries. Nevertheless, it is necessary to score patience and lead this work till the end, because oldness along with pension issues awaits every of us .

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