State Budget for 2019 discussed in parliament

The state budget for 2019 was discussed at the joint meeting of parliamentary committees on November 5.

Addressing the event, Azerbaijani Finance Minister Samir Sharifov noted that depreciation of currencies of the neighboring countries and trade partners of Azerbaijan increases impact on manat rate.

“Although the stabilization of oil prices may have a positive effect on Azerbaijan, the potential negative effects of economic instability in the region on the country’s economy should also be taken into account,” he said.

The minister noted that the prevention of the impact of external macroeconomic threats on the country's economy will be one of the main goals of monetary and fiscal policy for 2019.

In turn, Deputy Economy Minister Shirzad Abdullayev noted that by the end of the year, 13 agroparks will be created in Azerbaijan.

Addressing the event, he underlined that six agroparks have already been created, in 30 regions of the country work is underway to create agroparks and large farms, adding that the total area is 192,000 square meters, and the volume of investments is 1.4 billion manats ($823.53 million).

Abdullayev went on to say that the government provides comprehensive support for the creation of agroparks and the development of agriculture. Thus, 219 million manats ($128.82 million) were allocated for the creation of infrastructure of agroparks and another 111 million manats ($65.29 million) accounted for concessional loans for residents of these agroparks.

According to the government’s forecasts, the scope of agriculture, forestry and fish farming in 2018 should increase by 5.1 percent, in 2019 - by 4.6 percent, in 2020 – by 4.8 percent, in 2021 – by 4.6 percent, in 2022 – by 4.3 percent.

Further, he pointed out that so far, 2.7 billion manats ($1.59 billion) have been allocated to entrepreneurs through the investment promotion mechanism.

The deputy minister said that the implementation of these projects will create over 21,000 new jobs.

He added that about 200 enterprises that received a certificate of investment promotion have already opened, and the rest will be launched by the end of 2019.

Abdullayev also reminded that in 2019, the volume of investments in fixed assets is projected at 17.9 billion manats ($10.53 billion), including almost 7.5 billion manats ($4.41 billion) of foreign investment, and 10.4 billion manats ($6.11 billion) of domestic investment.

In general, the deputy minister noted that as a result of measures planned in the non-oil sector, the growth rate of non-oil GDP in Azerbaijan in 2019 will be 3.9 percent, and in subsequent years the growth will be at the level of 3 percent and higher.

The revenues of the state budget for 2019 are forecasted at 22.92 billion manats ($13.48 billion), that is 768.5 million manats ($452.06 million) or 3.5 percent more.

In the structure of revenues, 7.316 billion manats ($4.303 million) or 31.9 percent will come from the Taxes Ministry, 11.364 billion manats ($6.68 billion) or 49.6 percent from SOFAZ transfers, 3.45 billion manats ($2.03 billion) or 15.1 percent from State Customs Committee’s transfers, 785.6 million manats ($462.12 million) or 3.4 percent from other sources.

Expenditures are expected to make up 24.78 billion manats ($14.58 billion) up 1.68 billion manats ($) or 7.3 percent.

Expenditures for education are planned to reach 2.275 billion manats ($1.39 billion), health expenditures – 1.048 billion manats ($616.47 million), defense spendings – 3.038 billion manats ($1.79 billion), expenditures for international activity and membership to international organizations – 185.7 million manats ($109.23 million).

Revenues of the consolidated budget for 2019 are forecasted at 29.72 billion manats ($17.48 billion), up 1.6 billion manats ($941.18 million) or 5.7 percent in comparison to the current year, expenditures – 27.37 billion ($16.1 billion) , up 797 million manats ($468.82 million) or 3.0 percent.

The limit of need criterion for 2019 was set at 143 manats ($84). Subsistence minimum will be 180 manats ($105) across the country, 191 manats ($112) for able-bodied people, 149 manats ($87) for pensioners, 160 manats ($94) for children.

Addressing the event, Taxes Minister Mikayil Jabbarov noted that the ministry considers it necessary to introduce tangible tax incentives to ensure transparency in the labor market and wages.

The minister stressed that the main goal set by the head of state for the tax service is to form tax activities and reform tax legislation in order to stimulate private investments, support the economy and develop entrepreneurship.

Jabbarov added that, in order to achieve the objectives, it is important to ensure equal conditions and equal tax burden. As he noted, the proposed tax benefits for 2019 serve these purposes.

Presently, the priorities for the ministry are tax evasion reduction, expanding the taxable base, optimizing tax benefits and improving their economic efficiency, as well as improving tax administration, the minister said.

In turn, Executive Director of the State Oil Fund of Azerbaijan (SOFAZ) Shahmar Movsumov stressed that Azerbaijan’s strategic currency reserves, which have reached $45 billion over 10 months, provide an opportunity for successful implementation of measures to counter the global crisis and rapidly solve economic, social, environmental and other issues.

“The structural reforms carried out in all sectors of the country recently, the liberalization of the economy and the development of the non-oil sector have ensured the sustainability of Azerbaijan’s economy,” he said. “

“SOFAZ’s basic indicators for 2019, as well as the parameters of the state budget have been formed on the basis of the average annual oil price of $60 per barrel,” he said.

He went on to say that application of new fiscal budgetary rules on medium-term and long-term management of expenditures of the 2019 consolidated budget reduces the dependence of the state budget on the volatility of oil revenues and creates conditions for strengthening of budget discipline,” he said.

“SOFAZ’s expenditures for the next year have been formed taking into account these rules,” Movsumov explained.

He pointed out that SOFAZ’s budget surplus in 2019 is projected at 4.214 billion manats.