Azerbaijan’s parliament passed on Friday a budget for 2018 based on an oil price of $45 per barrel and foreseeing 1.5 percent growth in gross domestic product (GDP) next year, Reuters reported.
A recent slide in the price of oil, which with gas accounts for about 75 percent of state revenues and 45 percent of GDP, has hit growth, the budget, the balance of payments, the manat currency and foreign exchange reserves.
Azeri GDP declined 0.7 percent year-on-year in January-October this year, and Moody’s said in September it expected the Caucasus republic’s economy to contract for a second consecutive year in 2017. Azeri GDP shrank by 3.8 percent in 2016. The government expects the economy to grow by 1 percent this year.
The budget sees annual inflation slowing to 6.1 percent in 2018 from 13.2 percent anticipated this year. Azerbaijan’s budget deficit is expected to fall to 900 million manats ($529 million) in 2018 from 1.175 billion manats expected this year.
Revenues are seen at 20.1 billion manats in 2018, up from 16.8 billion projected for this year. Spending is expected at 21.1 billion manats, up from 17.9 billion in 2017.
Kavkazuzel news outlet wrote that Azerbaijani independent economists slammed the country’s budget. “The parameters laid at the 2018 budget show it is still vastly dependent on oil. As in previous years, the revenues are made from transfers of the State Oil Fund SOFAZ, which would equate to 45 percent of the budget’s total revenues next year. Given the amount of the taxes by oil companies in Azerbaijan, it will cover only 2/3 part of the budget revenues. That means the reforms declared by the leadership aimed at the development of the non-oil sector in Azerbaijan have produced little result,” Gubad Obadoghlu, member of the Public Chamber of Azerbaijan told. He next pointed to the lack of budget transparency, where around 40 percent of the expenditures are closed to the public.
Natig Jafarli of the Republican Alternative Movement (ReAl), in turn, spoke of the necessity of publishing budget implementation data on the finance ministry website, which is not a practice in Azerbaijan. “The public remains unaware where the millions of from oil revenues are spent,” Jafarli said.
The 2018 budget envisages 11% growth on the basic standard of living to stand at 173 manats ($102) for the working population, 144 manats ($84.78) for pensioners and 154 manats for children.
Jafarli insists while drawing the number of the minimal living standard the authorities took no notice of the inflation which has stood at 14% this year. Furthermore, as the expert suggested, the government sought to supplement the budget by taxes and excise fees which would inevitably entail a price hike.
Political commentator Anton Yevstratov was the next who reflected on the Azerbaijani budget labeling it as “miserable”. “In 2018 Azerbaijan will spend $1.6 billion on security and defense. Yet the issue remains for Baku to make payments for the already signed contracts. As usual, Azerbaijan comes up with unjustified costs such as buying MIG-29 և SU-25 bombers which would hardly overcome Armenia’s and Artsakh air defense,” wrote the analyst in Eadaily.com.