A problem of efficient control over state expenses has always assumed special actuality for independent Azerbaijan. Since the arrival of international organization in the country major accent was put on consolidation of institutional bases, renewal and adoption of new legislative acts. It is worth to recall that since the very beginning the IMF has voiced his serious concerns on willful treatment of the government with the oil revenues, concentrated at the State Oil Fund of Azerbaijan (SOFAR). The oil revenues were to serve to welfare of the nation, but not spent on refugees and infrastructure projects.
However, the firm ground the government, who regarded the problem of refugees as an urgent task, while the constriction of the Baku-Tbilisi-Ceyhan oil pipeline is of vital importance for the country. It was worth for Azerbaijan a refusal of the IMF from the approval of the next installment for poverty fighting.
The period of dictation by the international organizations have been left behind for the Azerbaijani government. Perhaps, with the inflow of revenues from profit oil, a problem of public financing has acquired a principle relevance for the society and the government puts every effort to be legible in this respect. If some 5-10 years ago they spoke with a sinking heart about the forecasts on achievement of fantastic incomes by 2010, now we witness this process. According to calculations by experts of the Center of Economic Researches, the oil revenues in our country in the period of 2001-2005 made up US $2,444m. The bright example for it is the annual rise of public budget and the budget of the SOFAR.
As of 30 June 2006 the public budget of the SOFAR constituted 1,414,2m manats (approx $1,579m), showing a 10.4% rise as compared to the beginning of the year. In this condition the incomes are indeed in need of reliable control.
Dynamic of oil production in Azerbaijan
Despite some evolution process in the sphere of transparency of public finds over the past period still there is a need in Azerbaijan for economic political and public instruments for provision of proper reliability for right use public expenses.
For instance, the EITI is not new for Azerbaijan. EITI has been put forward by the British Premier Tony Blair in September 2002. It was aimed at increase of transparency of the remittances to the government and relevant public bodies, as well as transparency of governmental incomes of the countries where the companies are active.
Incomes from oil, gas and mining companies in the form of taxes, licensing payments, bonuses and other payments should be an important mean to ensure economic growth and social development of developing countries and countries with transition economy. However the absence of accountability and insufficient transparency of the incomes might complicate the inefficacy of management and promote the corruption, broke up of conflicts and increase of poverty.
Increase of the transparency and awareness on the amount of incomes enable the citizens and organizations to control over the activates of the government. It will complicate the misappropriation and use of revenues for purposes not linked with the provision of stable development and will contribute the progress of developing countries and countries with transition economy as a result of improvement of economic terms and more active attraction of direct foreign investments. The responsible companies are expected to benefit the equal right relationships in the economic field, more predictable terms of economic activities and possibility for more efficient provision of energy security. To date over 20 countries, including Azerbaijan, have joined the EITI.
Here the international organizations, local NGOS, SOFAR, the countrys government and even all people of Azerbaijan take identical position: provision of transparency of incomes, obtained from he implementation of oil revenues.
Meanwhile, not all oil and gas companies today publish reports individually, though the state commission takes measures in this respect. A trilateral memorandum, signed in 2004, between the state commission and coalition of NGOs on transparency, did not prohibit the companies to publicize their reports. Some companies, particularly BP, have voluntarily set up publication of their data, whilst others still regard it as commercial secret and regard its publication as violation of the term of the contract.
So, there are too many barriers to pass in order to increase the public awareness on oil revenues in Azerbaijan. With this respect it is planned to launch a campaign General oil revenues as part of the EITI from September 2006.
Another important moment in the evolution of financial control is the adoption of the Law on State Financial Control. At present the document is passing the international examination, though earlier the parliament was expected to adopt the law before the summer holiday.
The financial control in Azerbaijan can be divided into foreign and internal, which implemented by the Finances Ministry and Accountancy Chamber respectively as an independent state financial control body. Their key task in the current stage is to increase the efficiency of the activities in the sphere of financial control and avoiding the unnecessary doubling of financial control activities.
It is worth to put a special accent here on the activities of the Accountancy Chamber of Azerbaijan, which as an independent body of financial control, is involved in check-up of public funds. Every May the Accountancy Chamber submits to the parliament a report on its annual activities. In accordance with the foreign consultants opinion, the experience of consideration of a report at the parliament is legally no irreproachable and does not meet the roles of Rome Declaration on independence of the supreme state audit body. In whole they support approaches on the restriction and exact description of the functions of foreign and domestic audit, as well as application of the obligatory financial responsibility system at the state organizations. In particular, the draft law on state financial control exactly outlines the functions of the Finances Ministry and the Accountancy Chamber in the sphere of financial control and audit. Thanks to it the joint control measures of the two state control bodies will be more e
fficient.
Efficient financial control over management of funds is the major factor strengthening the public confidence towards the state power, by means of consolidation of power and public in the achievement of a common objective insuring welfare of citizens and stability of the authorities.