Uneasy year for Azerbaijan’s economy

By Ildirim

The year 2015 will be a difficult one. This is something Azerbaijan’s Finance Finistry openly says in its draft budget submitted to parliament. 

“The developments in Ukraine and sanctions imposed on Russia are having a negative impact on the economies of the Commonwealth of Independent States (CIS), 

particularly on Belarus and Kazakhstan, which are members of the same economic bloc with Russia. Azerbaijan’s export and import operations will be affected as the country is economically connected with members of the CIS,” the draft says.

Let’s move on to facts and see what specifically awaits us in the coming year. The key issue is the price of oil, which makes up most of our exports. The presumed price of Azerbaijani oil next year is $90 a barrel, down from $100 a barrel expected for this year. 

In other words, Azerbaijan expects its State Oil Fund (Sofaz) to get less petrodollars in 2015. The state oil company, SOCAR, will also pay less tax to the state budget.  

Budget revenue in 2015 is forecast at 19.4 billion manat and budget spending is expected at 21.1 billion manat. Budget deficit will be smaller than it is expected for this year.

 Budget revenue and spending will both grow by about a billion manat from this year. 

While budget income will be very close to that in 2013, spending will grow significantly.   

Out of the 19.4 billion manat revenue forecast for next year, 10.4 billion manat, or 54 percent, will be transferred from the State Oil Fund. In other words, the state budget will heavily depend on income from the sale of oil and natural gas. 

There are some interesting sources of revenue mentioned in the draft budget. For instance, the budget will get 6 million manat from the rental of land owned by the state and 7 million manat from the lease of state-owned enterprises. In total, the State Property Committee will provide only 13 million manat to the state budget next year. That means state property is either worth nothing, or our officials are treating entrepreneurs very mildly when it comes to the rental of state property. There can be some othe reasons as well… 

Less money will be allocated to the spheres of education, judiciary and social protection next year compared with this year. 

So, is life going to be easier in 2015? The government expects consumer prices to rise to 2.3 percent. The rate of manat will be kept at 0.78 manat per dollar. 

People’s incomes will grow by 5.8 percent. 

How convincing are these figures given that oil prices and production will fall?

Bakudaily.Az