Azernews.Az

By Sara Israfilbayova

Discussions on Azerbaijan’s draft state budget and the concept of socio-economic development for 2018 and the next three years started in the Parliament on November 21.

Addressing the event, speaker of Azerbaijani parliament Ogtay Asadov said that the discussed budget package reflects positive dynamic changes in Azerbaijan’s economy, further adding that the share of the non-oil sector in Azerbaijani budget's revenues reached 50 percent, and this is an indicator of the sector’s development.

Asadov stressed that diversification of the Azerbaijani economy, improvement of the business environment increased the country’s economic competitiveness, and te country’s position in international ratings has improved.

He added that the draft state budget for 2018 was drawn up taking into account the economic situation of the country and modern challenges: “This year, just like each year, the state budget is socially oriented,” Asadov said, adding that the budget also makes it possible to increase the country’s defense capabilities.

In turn, Azerbaijani MP Ziyad Samadzade stressed that the share of tax revenues in Azerbaijan’s state budget for 2018 will make 11.4 percent of the country’s GDP forecast for the next year.

Samadzade stressed that the revenues from Taxes Ministry are forecast at 7.94 billion manats next year.

He also noted that revenues from Azerbaijan’s State Customs Committee next year are projected at 2.25 billion manats ($1.32 billion), which makes 3.24 percent of Azerbaijan’s GDP forecast for the next year.

The government forecasts growth of the country’s real GDP at 1.5 percent in 2018. The country’s GDP next year is expected to reach 69.4 billion manats ($40.81 billion). At the same time, 47.6 billion manats ($28 billion) in Azerbaijan’s GDP will account for the non-oil sector, which will grow 2.9 percent next year.

In accordance with the Azerbaijani government’s forecast, 83 percent of the country’s GDP will be formed in the private sector.

Azerbaijan’s GDP shrank 3.1 percent in 2016. The government expects that this year the country’s economy will grow 0.3 percent and will continue to grow until 2021.

Further, speaking of the banking sector the MP stated that Azerbaijan needs to regain public confidence in the country's banking sector.

“The Azerbaijani banking sector has sufficient assets, however, it doesn’t actively participate in the lending process,” he explained. “That’s because the population has lost confidence in the banking sector.”

In addition, problems in Azerbaijan’s banking sector are being solved quite slowly, he said.

“First of all, it is necessary to reach consensus in resolving the problems between the Azerbaijani population and banks in the country,” he noted, adding that it is necessary to solve issues with problem loans and define their structure.

Chairman of the country’s Central Bank (CBA) Elman Rustamov, taking his turn, mentioned that the position of CBA with regard to cryptocurrency remains conservative.

He said that the CBA does not consider cryptocurrency as an alternative means of payment, adding that cryptocurrencies continue to be a dangerous instrument for investing.

“We think that cryptocurrencies continue to be a dangerous instrument for investing,” added Rustamov.

Speaking about the blockchain technology, the CBA head noted that this is a very advanced technology that can lead to changes in many sectors, including the financial one.

“The Central Bank intends to help in studying this technology and its future use in the financial and banking sector of Azerbaijan, and in the future in public services for the population. For this, we have already started negotiations with leading consulting companies. I think that at the first stage, we must create stable technological and legislative infrastructure, and then start introducing this technology,” added Rustamov.

Speaking of surplus of the payments balance of Azerbaijan the CBA head stressed that it amounted to $1.1 billion in the first nine months of 2017.

“However, the improvement depended not only on oil prices. The volume of imports has decreased by more than twofold as compared to the maximum indicator, and the forecast is $6.5 billion as of late 2017,” he noted.

The positive impact on the balance of payments also had an increase in non-oil exports, which rose by 31 percent in the first nine months of 2017. Positive trends along with the trade balance were also observed in the balance of services, while a surplus was observed in the tourism services sector,” said the CBA head.

As a result, the country’s strategic currency reserves increased by 12 percent and the Central Bank’s foreign currency reserves – by 31 percent in the current year, he added.

Further Rustamov mentioned that strengthening of the Azerbaijani manat rate could lead to a number of macro- and microeconomic risks.

“Since the beginning of the year, Azerbaijani manat has strengthened by four percent, and since late February - by 11.5 percent,” he said.

“Over the past nine months, Azerbaijani manat was under pressure of further growth. From a microeconomic point of view, this could discourage and reduce competitiveness of investments and new export directions, and, from a macroeconomic point of view, the strengthening of Azerbaijani manat would lead to worsening of the balance of payments and increase in imports.”

Finance Minister Samir Sharifov, for his part, stressed that the pace of recession of the Azerbaijani economy declined from 3.9 to 0.6 percent during the year.

Touching upon the country’s non-oil economy, Sharifov noted that it increased by 2.5 percent in the period: “The trend towards a positive balance in the trade balance and balance of payments has also increased. As a result of stimulating the non-oil exports, a surplus in the amount of $4.4 billion was accumulated in the foreign trade balance.”

Sharifov noted that as a result of saving foreign exchange reserves, foreign currency revenues to the country, as well as other monetary and fiscal measures, the deficit of the state budget decreased by 12 percentage points since early 2017 and a surplus of 1.2 percent of GDP was reached in January-September 2017.

“The aggregate foreign currency reserves of the public sector rose by 10 percent or $4.5 billion during the period,” said the minister.

Moreover, the rate of Azerbaijani manat against the U.S. dollar has strengthened by more than 10 percent since early 2017, he added.

Speaking at the event, Economy Minister Shahin Mustafayev noted that construction of the Masalli Industrial Zone will be completed by the end of this year.

The minister stressed that 5 waste recycling enterprises in the Balakhani Industrial Park have began operating in the first half of this year.

“About 400 new workplaces were created at these enterprises. Simultaneously, the second section of the industrial park is working on the creation of seven production sites,” Mustafayev said.

The minister went on to say that in the Pirallahi Industrial Park, established with the purpose of organizing the local pharmaceutical industry, work on the establishment of Hayat Pharm and Caspian Pharmed plants are underway, further adding that at these enterprises it is planned to create about 350 new workplaces.

The minister said that in the construction of 9 factories in the Mingachevir Industrial Park will be invested $150-200 million, which contributes to the opening of more than 5,000 new workplaces.

He also stressed that in the Neftchala Industrial Park, six enterprises have already been operating, and three enterprises plan to start work early next year. It is planned to invest over $45 million manats ($26.47 million) in these enterprises.

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