Forecast for 2019 state budget revealed

The draft law on the 2019 state budget and the concept of social and economic development for 2019 and the next three years were presented for discussion to the Parliament of Azerbaijan.

The draft law says that the revenues of the 2019 state budget of Azerbaijan are projected at 22.917 billion manats ($13.48 billion), including centralized revenues at 22.18 billion manats ($13.05 billion) and local revenues at 736.766 million manats ($433.39 million), while the expenses are expected at 24.78 billion manats ($14.58 billion), including centralized expenses at 23.939 billion manats ($14.08 billion) and local expenses at 840.812 million manats ($494.59 million).

The forecast for the oil price, indicated in the 2019 state budget for calculating oil revenues, is $60 per barrel. This price is based on the expectations of international financial organizations, which predict the oil price at $60-70 per barrel in 2019, and other global factors.

Some 59.8 percent of the forecast state budget revenues or 13.7 billion manats ($8.06 billion) will account for the oil sector, and 40.2 percent or 9.217 billion manats ($5.42 billion) will account for the non-oil sector.

In the forecast state budget revenues, 31.9 percent or 7.316 billion manats ($4.303 billion) account for revenues from the Ministry of Taxes, 49.6 percent or 11.364 billion manats ($6.68 billion)- for transfers from the State Oil Fund, 15.1 percent or 3.451 billion manats ($2.03 billion) for revenues from the State Customs Committee, 3.4 percent or 785.6 million manats ($462.12 million) - for other revenues.

Revenues from VAT are projected at 4.097 billion manats ($2.41 billion) [including 2.294 billion manats ($1.35 billion) from VAT on imported goods], from income tax - at 2.670 billion manats ($1.57 billion), from personal income tax - at 880 million manats ($517.65 million), from excise tax - at 927 million manats ($545.29 million) [including 325 million manats ($191.18 million) from excise taxes on imported goods], from customs duties - at 801 million manats ($471.18 million), from simplified tax - at 322 million manats ($189.41 million), from tax on the subsoil use - at 133 million manats ($78.23 million), from road tax - at 82 million manats ($48.23 million).

Moreover, draft state budget for 2019 envisages an increase in the funds allocated for defense purposes.

In total, it is planned to allocate 3.037 billion manats ($1.77 billion) for military spendings.

Out of these funds, it is planned to allocate 1.494 billion manats ($878.82 million) for defense forces and 156.989 million manats ($92.35 million) for national security.

There are plans to allocate 2.8 million manats ($1.65 million) for carrying out applied research in the field of defense and security, and it is also envisaged to allocate approximately 1.4 billion manats ($823.53 million) for expenses not related to other categories.

Further, the draft law reads that the country’s state budget expenditure is projected at 840.8 million manats ($494.59 million) for 2019, which is 116.9 million manats ($68.76 million), or 16.1 percent more compared to 2018.

The main reason for the increase in expenditures for 2019 is this year’s increase in salaries of employees of companies and organizations financed by the state budget, and the increase in the amount of certain social benefits and pensions, the increase in expenses for the purchase of food in preschool institutions, and the increase in expenses in travel, defense expenditures, payment to translators, specialists and experts.

Thus, 238.4 million manats ($140.23 million) of local expenditures or 28.4 percent will be directed to expenditures in education (expenditures for financing preschool institutions), 231.5 million manats ($136.17 million) or 27.5 percent will be directed to expenditures in healthcare, 230.9 million manats ($135.82 million) or 27.5 percent will be directed for housing and utility expenses.

This is while 110 million manats ($64.70 million) or 13.1 percent will be allocated for the maintenance of executive bodies, 8.6 million manats ($5.06 million) or one percent will be allocated for expenses in the fields of culture, art, information, physical culture and for expenses not related to other categories, while 21.4 million manats ($12.59 million) or 2.5 percent will be directed to other expenses. The upper limit of the state budget deficit in 2019 is provided in the amount of 1.86 billion manats ($1.09 billion). Its financing will be carried out at the expense of the balance on the single treasury account, foreign loans and privatization receipts.

Besides, the Azerbaijani government has forecast real GDP growth for 2019 at the level of 3.6 percent. Earlier it was predicted that the country's economy will grow by 3.1 percent next year.

A growth by 3.8 percent is expected in 2020 (previous forecast was 3.5 percent), a growth by 3 percent – in 2021 (2.4 percent earlier), by 2.7 percent - in 2022 (forecast for 2022 was not provided previously).

In the non-oil sector, the government expects a growth of 3.4 percent for 2018, 3.9 percent for 2019, 3.8 percent for 2020, 4.6 percent for 2021 and 3.6 percent for 2022.

The oil sector, despite the expected decline of 0.3 percent this year, will steadily grow in the coming years. Accordingly, the growth rate of the oil sector is expected to be 3.1 percent in 2019, 3.8 percent - in 2020, 3.6 percent - in 2021, 1.3 percent - in 2022.

It is envisaged to allocate 185.7 million manats ($109.23 million), or 0.7 percent of Azerbaijan’s state budget expenditures in 2019 for international activities and membership fees to international organizations, according to the bills included in the budget package for 2019.

Besides, the amount of expenses for the maintenance of the trade missions of Azerbaijan in foreign countries in 2019 was named.

The document says that it is planned to spend 3.7 million manats ($2.18 million) next year for the maintenance of trade missions located and operating in foreign countries in order to attract investments to Azerbaijan.

Furthermore, the document reveals funds envisaged for Azerbaijan’s international activities in 2019.

Thus, as many as 23 million manats ($13.53 million) of these funds will be allocated for membership fees to international financial organizations, 24 million manats ($14.12 million) will be directed to membership fees to international political organizations, 115 million manats ($67.65 million) – for maintaining diplomatic missions and consulates of Azerbaijan, 3.7 million manats ($2.18 million) – for maintaining foreign trade missions and 20 million manats ($11.76 million) for other international activities.

In addition, expenditures for holding international events and events of the republican level are projected at 75 million manats ($44.12 million).