Experts: Azerbaijan takes a step towards a non-raw materials economic model

The Azerbaijani authorities have taken consistent steps towards the promotion and development of the real sector of the economy, economists said in interviews to Vestnik Kavkaz, commenting on the recent draft amendments to the laws 'On deposit insurance', 'On currency regulation', the law 'On full deposit insurance' and changes to the tax code by the Milli Majlis.

The first and third of the bills require the introduction of three-year insurance for all deposits in member banks of the Azerbaijan Deposit Insurance Fund, regardless of their amounts. The new rules of the Tax Code release individuals from paying taxes and dividends for three years, and 50% of the income of legal entities for seven years. Entrepreneurs have seven years of 'holidays' in terms of property and land, import of technologies from customs duties and VAT. At the same time a fee of 20% of any amount of more than $50,000 dollars a year will be charged from one physical, or legal entity.

Financial expert Farhad Amirbayov highly assessed the decision on 100% insurance of the population's deposits.

"This is a brave step forward in the protection of commercial banks, because their main source of stable fund replenishment is citizens' deposits. However, I am concerned about the fact that deposits in foreign currency also come under this protection. I think this is illogical, as it is necessary to encourage citizens to make deposits in the national currency,'' he said.

A former Deputy Minister of Economy, Oktay Ahverdiyev, drew attention to other urgent measures taken by the authorities to mitigate difficulties associated with the devaluation of the manat and the fall in oil prices.

"Salaries and pensions of health, education, medicine, culture and sports employees were increased yesterday. 100% insurance of individuals' deposits was made in order to significantly reduce the flow of capital from the country, as well as 20% of tax for the transfer, or exports of currency from Azerbaijan. In addition, it was necessary to restore public confidence in the country's banks. This is also the cause of full insurance. If a bank goes bankrupt, then the state will return the money to the population," he said.

Seven years of freedom from many essential taxes for Azerbaijani business is a direct measure to stimulate the development of the real sector of the economy, Oktay Akhverdiyev said. "The growth of the non-oil sector needs to be accelerated. In general, it is developed quite actively in Azerbaijan. For example, it grew 8% last year, generally due to the non-oil sector. The Azerbaijani economy grew 1.5% in one year. The republic has managed to keep GDP from reducing. These changes to the Tax Code were made in order to accelerate the development of the non-oil sector," the expert concluded.