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Finding new sources of revenue, reducing non-priority spending

Finding new sources of revenue, reducing non-priority spending

Economy
17 April 2020, 17:36 201
Experts positively assess the president's instructions on cost optimization in the current situation
 
President of Azerbaijan Ilham Aliyev has touched upon some important issues at the meeting on the socio-economic results of the first quarter of 2020. The head of state noted in his opening speech that the indicators for the beginning of the year suggest that the continuation of reforms in Azerbaijan is producing good results. "In particular, our economic and social indicators in January-February were very positive. However, we experienced a certain recession in March. And this is natural because coronavirus is a big disaster for the whole world and a major problem for the global economy. If we take three months of the year as a whole, we can see that there is still development and progress. But everyone should know that the world has entered a new stage today and even the most developed countries are faced with big problems.”
The head of state noted that the impact of the pandemic on the economic situation is inevitable. "I want to say once again that the impact of the pandemic on the economic situation is inevitable. We are already seeing it. Therefore, I ask the government, especially the Prime Minister, the Minister of Finance and the Minister of Economy, to review government spending and reduce non-priority spending. At the same time, it is necessary to apply the mechanism of rigorous control over spending. I expressed my opinion on this issue earlier. Recently, there has been a positive trend in this direction, as a result of which, both last year and in the three months of this year, we managed to transfer additional financial resources into the budget. But I think that there are still reserves, and it is necessary to review both investment and current expenses. Because sometimes running costs are inflated. In particular, unfortunately, the running costs of state organizations, state companies are inflated, so very serious attention should be paid to this area. Additional steps must be taken to ensure full transparency in this area.”
President Ilham Aliyev noted that he has asked the government to find new sources of revenue. "I want to say this again: there are reserves, there are ample reserves. Some of these reserves have already been identified recently, and budget revenues are growing - both last year and in 2020. Last year, more than one billion manats was transferred into the budget in excess of the forecast, and over three hundred million manats over the three months of this year. Therefore, it is necessary to seriously examine this issue and prepare proposals. I want to say this again: we do not know how much longer this situation will last. Therefore, we must take steps so as to ensure economic, macroeconomic stability.”
 
Economist, MP Aydin Huseynov said that with the spread of the coronavirus, there was a need to optimize some budget expenditures. "If we look at the economic indicators for the first month of the year, we can see that significant increases were observed in state budget revenues and the non-oil sector. On March 13, the WHO declared the coronavirus a pandemic. Serious steps have been taken in Azerbaijan to prevent the spread of the virus. Serious reforms have been carried out in the health and social spheres. Various measures have been taken to prevent the social problems of citizens. To maintain the stability of the country's economy, 2.5 billion manat was allocated from the state budget. This was not taken into account when drafting and approving this year's budget of the Republic of Azerbaijan. These unforeseen expenditures have had an impact on state budget revenues and expenditures. Some spending has been postponed. The current situation makes it necessary to take certain measures to optimize costs. Our main goal should be to implement the planned social measures. Salary and salary-related expenses will not be reduced. In this sense, it is very important to optimize other costs while maintaining the implementation of social programs. Today, there is a need to transfer some non-essential expenses to the coming years. Our sources of income must be reconsidered. As the president has noted, new sources of income must be sought. During the pandemic period, our budget should be allocated only to cover important expenses. As you know, it is very difficult to make an accurate forecast of oil prices. The demand for oil in the world market has decreased significantly. Prices have fallen sharply since March. OPEC + countries have taken steps to prevent this decline. Falling prices have a serious impact on the incomes of oil-producing countries. In this sense, Azerbaijan's oil revenues have also decreased. I think that the drop in prices will not affect the implementation of our programs in general. We have enough foreign exchange reserves,” the MP noted.
Jafar Ibrahimli, a financial expert, said the pandemic had significantly slowed the pace of global economic growth. "The decline in economic activity in one way or another harms our budget revenues. When the state budget was drafted, mainly social and investment expenditures were considered. At that time, our revenues and budget revenues were sufficient. Substantial increase in all expenditures, support for business, financing of infrastructure and social projects were taken as a basis. But the spread of the pandemic has delayed some expenditures. I think that some of the non-essential budget allocations, investments, and expenditures to support the private sector should be reconsidered. These costs can be reduced to some extent. Social projects should be maintained as they are. The price of oil is $ 55 on the state budget. But this figure plays a key role in calculating the budget summary. That is, this figure may change. At a time when prices are falling so sharply, this issue needs to be reconsidered. 11 billion manat is expected to be transferred to the budget from the State Oil Fund. This amount may also decline slightly,” he said.
 
Shabnam Mehdizade