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Results of radical economic reforms in Azerbaijan

Results of radical economic reforms in Azerbaijan
According to experts, the steps taken will lead to further expansion of Azerbaijan’s economy

Next year's budget will be both investment and socially-oriented, Azerbaijani President Ilham Aliyev said in his speech at a meeting of the Cabinet of Ministers dedicated to results of socio-economic development in the nine months of 2018 and objectives for the future.

The head of state pointed out that all social projects will be implemented. "At the same time, sufficient funds will be allocated for the state capital investment. The key issue for us is to use these funds efficiently, solve the main problems facing our country, and choose priorities thoroughly. The State Investment Program must serve the real sector of the economy and, at the same time, be directed to the implementation of infrastructure projects that are still unresolved.”

President Ilham Aliyev noted that radical reforms in the economic field are being continued this year. "We are seeing the results of these reforms. Especially, the reforms in the tax and customs system are leading to great, positive changes. The reforms must be continued. Today, all the necessary steps on issues relating to the field of tax and customs that concern entrepreneurs and society must be taken in order to resolve these unpleasant situations.”

The president emphasized that the customs authorities have collected more than 800 million manat this year. "I highly appreciate this. I am confident that by the end of 2018, this amount will increase. This shows that, first of all, Azerbaijan's economy is developing successfully, the imports are growing, which is related to the development of our industry. Considering that exports considerably exceed imports, we should assess the growth of imports positively. The positive balance of our foreign trade is $6.5 billion in 9 months. Some think that the increase in imports can lead to certain problems. Yes, it is true, but in case if there is no increase in our exports. The exports are growing at a much higher rate than imports. If we have the positive balance of $6.5 billion in six months, then we will have more by the end of the year. The increase in imports is directly related to the development of the industry and the improvement of people's well-being.”
The head of state added that one of the reasons for the increase of customs duties is the growth in imports. "But at the same time, I must say that other factors also play a positive role. The structural reforms, transparency, serious fight against corruption and bribery have also led to the collection of more than 800 million manat of additional funds in the customs bodies.”

According to MP Azer Badamov, this will have a positive impact on the improvement of people's social well-being. "The fact that the budget is both investment and socially-oriented is a factor related to the country’s development. This year's budget has also been both social and investment-oriented. If we pay attention to the results of social and economic development of the 9 months, we can see that investing from the budget and increasing the amount of social spending contribute to the well-being of the people. Increase of investments from the state budget as well as from the private entrepreneurship accelerates the social and economic development of our country. On the other hand, it is a step taken to address the problem of unemployment in the country. In recent years, the creation of new jobs is an indicator of the investment and social-oriented budget. The step taken will also eliminate oil dependence.”

Economist Parviz Heydarov noted that the main direction of the state's investment is projects aimed at the development of the economy. "First of all, I want to remind that in recent years, all our state budgets have been essentially socially-oriented. That is, the main goal was to organize and further strengthen the social welfare of the population. At the same time, the budget also provided certain funds for the implementation of relevant investments. But due to the sharp decline in oil prices a few years ago, these funds have been used more responsibly. That is, when oil prices and production were high, investments were made mainly in infrastructure projects. While some of these projects created conditions for economic growth, the majority of them served to social issues such as improving the living conditions of the population and so on. However, gradually, the main direction of the state investment has become projects that provide the development of the economy.”

The economist also talked about the progress in the customs sector. "In fact, if we look at the statistics of recent years, we will see the development in the customs sector. Tax policy requires extensive and thorough reforms. It would be wrong to think about achieving high results in this field in a short period of time. But lately, it is felt like positive changes in the tax policy are expected after the steps taken in the tax authorities, and especially, after personnel changes. This will be characterized by increased surveillance and mitigation of tax rates. That is, we will witness the further stimulation of the tax policy.”

Touching upon the fact that exports exceeded imports recently, the expert positively assessed this situation. "Due to the stabilization of the economy since last year, exports exceeded imports in foreign trade. One of the key conditions is that a country sells more goods abroad than it buys. This is a very positive factor for the strengthening of any country's economy. This tendency has been observed in our country since last year and is becoming stronger. I think the government should keep this situation under control and should not allow imports to exceed exports.”

Head of "Ekonomiks” Center for International Economic Studies, former finance minister Fikret Yusifov, said that foreign exchange reserves, which provided Azerbaijan's financial stability, have increased by $3 billion and reached $45 billion during the previous reporting period. "In the last nine months inflation in the country was only 2.6 percent, and the population's revenues increased by 9.5 percent. Thus, the population's revenues exceeded the inflation rate 3.6 times. which is a manifestation of the stability of macroeconomic situation in Azerbaijan. Since April 2017, Azerbaijani manat have demonstrated full stability. Such stability of the national currency of Azerbaijan in the background of the fluctuations in the currencies of neighboring countries is one of the main reasons for the investment of $9 billion in the country's economy during the nine months of this year. Neither domestic nor foreign investors invest in a country without stability of national currency, as in the case of instability this is a very risky step. The most important thing is that the measures taken by the government to diversify the economy have begun to give its results in the field of investments as well. Thus, $5.6 billion or more than 62 percent of the $9 billion invested in the economy over the past nine months was directed at the non-oil sector. Such diversification of investments in the economy will lead to its rapid expansion. During the reporting period, Azerbaijan's foreign currency reserves increased by $3 billion and reached $45 billion. Our foreign trade turnover increased by 37 percent and our non-oil exports increased by almost 14 percent. Over the past nine months, 85,000 permanent jobs have been created in the country. All this is a logical consequence of the state's care for the economy.”

Gunel Azade


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