Azerbaijani parliament adopts state budget for 2017

The Azerbaijani parliament (Milli Majlis) adopted the draft state budget for 2017 during its plenary session on December 16.

According to the document, revenues of the state budget are forecasted at the level of 16.255 billion manats (including centralized income – 15,634,706,000 manats, local income – 620,294,000 manats) for 2017, expenditures – 16.9 billion manats (including centralized income – 16,211,286,000 manats and local income – 688,714,000 manats).

The upper limit of the budget deficit is expected at the level of 645 million manats (1.05% of the GDP) in 2017. Main sources of deficit coverage are revenues from privatization, internal and external loans, foreign grants and the remainder on the single treasury account of the state budget as of January 1, 2017, Trend reports.

Income of the state budget will be formed by revenues from the Ministry of Taxes (7.51 billion manats), the State Customs Committee (2.2 billion manats), the State Committee on Property Issues (8 million manats), paid services of government-financed organizations (353 million manats), transfers of the State oil Fund of Azerbaijan (6.1 billion manats) and other sources.

In 2017, expenditures of the state budget will be distributed as follows: defense (2.8 billion manats), science (118.5 million manats), education (1,733.4 million manats), healthcare (745.4 million manats), social protection and social security (2,053.1 million manats) and others.

Revenues of the consolidated budget are forecasted at the level of 20.02 billion manats, expenditures – 21.267 billion manats. Being an integral part of the consolidated budget, revenues of the State Social Protection Fund under the Ministry of Labor and Social Protection of Population are expected at the level of 3.4 billion manats, revenues of Nakhchivan Autonomous Republic – 348.4 million manats, the State Oil Fund – 8,370.6 million manats.

Deficit of the consolidated budget is expected at the level of about 1.247 billion manats. Oil prices were set at a price of $40 per barrel in the state budget for 2017.

The official exchange rate is 1.7525 AZN/USD on December 16.

The deputy editor-in-chief on economic issues at the 'Trend' news agency, Ilaha Mammadli, speaking with a correspondent of Vestnik Kavkaza, explained that  the economic situation in Azerbaijan, which adopted a new model of economic development, has significantly changed this year. "2016 was declared the year of deep economic reforms. 12 road maps were adopted to prepare for the reforms: one map on the prospects of the economic development and 11 maps in various areas of economic development," she said.

The expert noted that, according to the draft state budget for 2017, it will be focused on the macroeconomic stability of the economy. "This year we expect a decline in the economy, a small recession, but next year we forecast economic growth of 1%," Mammadli said.

According to her, there will be a fiscal consolidation next year due to a decline in oil prices. "First, it will not allow to increase the budget deficit, help us to cope with inflation, which is projected at 7.3% next year. Second, fiscal consolidation is needed to preserve strategic reserves. Third, fiscal consolidation will help us to strengthen our financial income," the deputy editor-in-chief on economic issues at the 'Trend' news agency explained.

She added that this year there are new sources of revenue in Azerbaijan. "This year in Azerbaijan were adopted amendments to the Tax Code. Cash payments of large businesses operating in trade and public catering will be restricted to 30 AZN per month. Cash withdrawal from bank accounts by legal entities and individual entrepreneurs will be taxed," the expert said.

"Since 2017 the sale of poultry meat and wheat products will be exempt from VAT for a period of three years. Interest income earned from deposits and dividends on investment securities will be also exempted from the tax until 2021," Mammadli noted.

The deputy editor-in-chief on economic issues at the 'Trend' news agency stressed that "they will continue to finance investment projects. Expenditures on social protection are more than two billion manat, it will exceed the expected rate for 2016 by 8.2%," she said.

"Spending on defense capability will increase by 2.1%," Ilaha Mammadli concluded.