Socially oriented expenditures to increase next year
The state budget of Azerbaijan for 2018 will be traditionally socially oriented, Finance Minister Samir Sharifov said.
“Azerbaijan is a developing country and has been able to achieve many tasks over the past 10-15 years. If we analyze our investment expenditures, we will see that they were quite high, while, as a rule, most of them are social expenditures,” the minister stressed speaking on AzTv channel.
He went on to say that the volume of social spending in the budget for 2018 is 7.7 billion manats ($4.5 billion), which is more by 650 million manats ($382.33 million), as compared to the current year.
“Social spending is primarily wages, social security issues, pensions, and their share in the budget is traditionally high enough. Only the expenses of the wage fund amount to 4.2 billion manats ($2.47 billion),” according to Sharifov.
The minister noted that the country’s spending on education traditionally has a large share in the structure of social expenditures and next year they will amount to 2 billion manats ($1.18 billion), which is 211 million manats ($124.11 million) more compared to the current year.
“Next year it is planned to allocate 250 million manats ($147.05 million) for the construction of social housing,” the minister stated.
The state budget revenues in 2018 were approved at the level of 20.127 billion manats ($11.84 billion), expenditures at the level of 21.047 billion manats ($12.38 billion) [including centralized incomes – 19.47 billion manats ($11.45 billion) and local incomes – 653.3 million manats ($384.27 million), centralized expenses – 20.323 billion manats ($11.95 billion) and local expenses – 723.9 million manats ($425.8 million)].
In the structure of state budget revenues, transfers from the State Oil Fund of Azerbaijan (SOFAZ) amount to 9.216 billion manats ($5.37 billion). Revenues from VAT are projected at 4.288 billion manats ($2.52 billion) [including 1.705 billion manats ($1.002 billion) on VAT from imported goods], income tax - 2.320 billion manats ($1.36 billion), tax on personal income - 1.196 billion manats ($703.49 million), excise tax - 726 million manats ($427.03 million) [including 172 million manats ($101.17 million) from excise taxes on imports of goods], customs duties - 535 million manats ($314.69 million), simplified tax - 380 million manats ($223.52 million), tax for the use of mineral wealth - 136 million manats ($79.99 million), road tax - 91 million manats ($53.53 million).
Sharifov went on speaking about the national currency of Azerbaijan, noting that manat has stabilized.
“Since the beginning of the year, the manat rate has even slightly strengthened [against the US dollar]. Compared to the beginning of the year, the manat rate strengthened by 3.4 percent, and in comparison with February - by 10 percent,” he said.
Sharifov noted that there is some pressure to further strengthen the rate of manat. However, according to the minister, this again shows that confidence in the national currency is being restored.
The results of 11 months of 2017, continued Sharifov, show that the economy has stabilized and become even more stable compared to previous years.
Touching upon SOCAR, the minister pointed out that the state budget envisages allocation of funds for the next year to increase the authorized capital of the State Oil Company.
These funds will be used in two directions, according to the minister.
“The first direction is the expansion of the exploitation of oil and gas fields and maintenance of production level (old deposits), and the second is the project of reconstruction and modernization of Baku Oil Refinery named after Heydar Aliyev,” he explained.
Sharifov noted that an important factor is the reconstruction and modernization of the Oil Refinery. He went on to say that for this purpose the state budget funds will be allocated for several years, adding that this should be considered as an infrastructure project.
SOCAR announced the liquidation of the Azneftyag refinery and its merger with the Baku Oil Refinery named after Heydar Aliyev, in 2015. This decision was made in the framework of works to improve and optimize the structure of the company.
The company plans to produce high-quality oil products as part of the next stage of the reconstruction work to be carried out at the Heydar Aliyev Baku Oil Refinery. Under the program, the oil refinery will produce Euro-5 standard diesel in 2019 and the Euro 5 standard petrol in 2020.
The cost of modernization of the refinery is estimated at about $1.5-1.7 billion. The project of reconstruction and modernization of the Baku Oil Refinery will be implemented in three stages (bitumen, diesel and gasoline).
Currently, the plant for the production of bitumen with a production capacity of 400,000 tons, which will be put into operation in the third quarter of next year, is being constructed. It is expected that the diesel phase will be completed in November, 2020, and the gasoline phase in February, 2021.
The production capacity of the refinery will be increased from 6 million to 7.5 million tons per year as a result.