The Milli Majlis Committee for Economic Policy, Industries and Enterprising held a meeting on 23 December that Committee Chairman Tahir Mirkishili announced whilst opening it was about the first reading of the 2021 State Budget of the Azerbaijan Republic Bill and the other Bills contained in the Budgetary Parcel.

The Milli Majlis had been one of the entities hit the hardest by the pandemic, according to Mr Mirkishili. Many parliamentary activities coinciding with the pandemic period have been held online whilst the current committee meeting, though taking place in the offline mode, is being broadcast to all the MPs. This innovation introduced at the request of Chair of the Milli Majlis Sahiba Gafarova is intended to keep all the MPs aware of the progressing discussions revolving around the basic parameters of the Budget Bill as well as to give answers to possible questions and make the deliberations more open and extensive.

The year 2020 that is nearing its end now is remembered by a number of problems; for that, the Azerbaijani people and state will be the only ones in the world for whom the passing year has been a victorious one. The Azerbaijani State demonstrated its might to the whole world during the 44-day Patriotic War the triumph in which was possible thanks to the unity of the nation and the state, and of the nation and the president of the country. Naturally, of the successes our country had achieved under the leadership of President Ilham Aliyev and of the strong national economy had mattered truly massively in the Victory.

Having said this, the Committee Chairman mentioned the pre-forecast reduction of the national economy by 4.9% by the end of 2020. US$35 per 1 barrel of crude oil had been the basic price in the 2020 Budget adjustments whilst crude oil sells for $41 a barrel currently and a 15% price-rise is anticipated during 2021, according to Mr Mirkishili. This means that it would not be out of the place to have US$40 per 1 barrel as a price used in budgetary calculations.

There have been positive developments in agriculture, communications and other sectors and not only reductions during 2020. Also during 2020, the oil sector’s share of the State Budget revenues has made 58% whilst the share of the non-oil sector has settled at 42%.

Further, the Committee Chairman said that the non-oil sector generated merely 26% of the Budget ten years ago as against the modern-time values of up to 46%, all thanks to the reforms in the economy of Azerbaijan.

Commenting on the first reading of the 2021 State Budget of the Azerbaijan Republic Bill, Minister of Finance Samir Sharifov said that the outbound year would go down in the national history as an exceptional year because it was in it that the Azerbaijani Army had put an end to the military aggression of Armenia. We all cherish the memory of the shahids who had sacrificed their lives to make this victory possible; at the same time, restoring the part of the Motherland for the liberation of which they had died was a paramount task, the Minister remarked. It is therefore planned to allocate AZN 2.2 bn from the State Budget for that purpose next year.

There is an allocation for our Army, too: the total defence spending is to approach AZN 4.6 bn next year, according to Mr Sharifov.   .

Whilst there have been large-scale measures to eliminate the public impacts of the pandemic during 2020, there are the equally important tasks ahead that have to be carried out in the de-occupied territories of the country during 2021.

The 2021 State Budget Bill and the Consolidated Budget Bill for the next 3 years are composed in compliance with the Budgetary System Law and the emphasis is on the growth of the non-oil sector as determined by the President of the country. The changes due next year and their anticipated influence on the macroeconomic reality in the country as well as the national economic growth and the related expectations have been taken into consideration. The national economy shrinkage by down to 4% is expected towards the year-end.

Besides, there are material governmental actions in stock to enliven the economy. A portion of the economic and social action package has been carried out already; the rest will be implemented next year. The Government’s efforts centre on restoring economic activity.

Then, Mr Sharifov mentioned the anticipated increase in the profit tax revenues of the State Budget next year, adding that the other collections should amount to AZN 700 mn.

According to the Minister, the forecast expenditures of the State Budget equal AZN 28 billion 543 million (37.7% of the GDP); this represents increases by AZN 1 billion 50.8 million or 3.8% from 2020 and by AZN 4 billion 117.1 million or 16.9% from 2019. The defence and education spending of the 2021 State Budget should rise by 5.1%.

President Ilham Aliyev keeps the matter of improving the public welfare in his sight invariably; this attitude is manifest in the next-year Budget, according to Mr Sharifov.

Next, Minister of Economy Mikayil Jabbarov spoke of the continued reinforcement of the macroeconomic stability in the country during 2020 – despite all the difficulties along the way. Though shrinking, the national economy has demonstrated high endurance all the same, which is especially true of its non-oil sector. That said, the biggest challenges are to restore the de-occupied lands, repopulate them with the native populace and provide the latter with employment opportunities, Mr Jabbarov pointed out.

The stringent quarantine action undertaken this year has borne on the economy of Azerbaijan. For example, fixed-capital investments have decreased. The investments put in the private sector have grown by 8% whereas the state organisations have demonstrated a decrease in their investments. Besides, there has been a rise in several spending items. The income of the population (with the inflation taken into account duly) fell in January-November. The country’s non-oil exports are expected to drop by approximately 5.6% by the end of the current year, mainly, due to the devaluation of the currencies of the countries that are the main trading partners of Azerbaijan.

The Government has made serious efforts to mitigate the impact of the pandemic on the national economy. It was thanks to those efforts that it has been able to inhibit the economic recession relatively. AZN 6.8 bn was collected in taxes for the State Budget in January-November this year.

Amongst other things, the growth of the collections in the non-oil sector was possible because the taxation system had encompassed the salaries paid to the people employed in this sector. Incidentally, this has reduced the size of the shadow economy, too. More than 84,000 employees were retained under contracts in the non-oil and private sectors since the beginning of 2020.

Chairman of the Management Board of the Central Bank Elman Rustamov spoke at the meeting to give information about the credit and monetary policy of the country and to tell of the profound financial strategy in place for next year of maintaining financial stability, supporting the financial sector and reinforcing the insurance and securities markets alongside addressing associated problems. Besides, the stability will also be ensured by the new approach to the deposit insurance. The 2021 State Budget projections are being made against the background of uncertainties as to the global economic activity; the pandemic will put individual national economies to stern trial, Mr Rustamov explained. It will be possible to make rather remarkable achievements as far as economic growth and improvement of public welfare are concerned by employing all the resources to hand efficiently, in the opinion of Mr Rustamov.

What else was said was that the country has enough action space to ensure economic growth and development and as regards the macroeconomic stability, it is being upheld by the measures adopted in the country already.

Mr Rustamov went further to speak of a partial reduction of the economic operators’ lost earnings; this reduction had proven possible because the concept defined by President Ilham Aliyev had been used. The foreign exchange reserves of the Central Bank have grown by more than 3%, which is a sign that there is no currency shortage in the market. Given all that, one could safely say that there are the chances to end the year with the inflation in the region of 2.8-3.3%. Then, the CBA Chairman said that the money supply had risen to 54% during 2018-2020; on the whole, the manat loans had fallen by 5.5% though the money supply growth had brought about a rise in lending. Also this year, there has been a rise in business lending. The financial sector remains energetic decline an overall decline in economic activity.

Next spoke Minister of Labour and Social Protection of the Population Sahil Babayev who mentioned the plan to allocate more funds to finance retirement pensions in 2021. The retirement and disability pensions of 2021 are planned to equal AZN 370 and AZN 337 respectively; our country remains a leader of the CIS in terms of both the minimum and the average monthly pension. As many as 27 ministerial services are available electronically; the digitalisation encompasses 85% of all the pension assignments there are. The citizens can benefit by using 16 e-certificates; it is intended to increase this number to 30 by the end of the year.

The Minister said that there had been monitoring sessions all through 2020 to discourage staff layoffs in the private sector. As regards the state authorities, all of their employees had been paid their salaries without fail though 80% of the staff had not come to office.

Special attention will be paid in the coming year to ensuring employment of the population who are to return to the liberated provinces; self-employment will be arranged for as many as 16,000 households.

It was further said that the court rulings in disfavour of the State Social Protection Fund had been reduced by 89%, which is another proof that its workings had been coming round.

The work to keep the Fund’s operations transparent continues. Benefits are pensions are assigned electronically and with the avoidance of contacts between officials and citizens. The SSPF will continue using the highest-level public service provision model.

Mr Babayev told the MPs that the revenues and expenditures of the SSPF were planned to equal AZN 5 billion 146 million next year.

The next speaker, Chairman of the Chamber of Accounts Vugar Gulmammadov, remarked on the 2021 State Budget being the first budget to cover the formerly-occupied territories of the country. In his opinion, the documents drawn up and tabled together with the 2021 State Budget Bill conform to the Budgetary System Law and provide for the transparency of the whole Budgetary Parcel.

The MPs Ali Masimli, Ziyad Samadzade, Mahir Mammadli, Aydin Huseynov and Vugar Bayramov who were taking part in the deliberations voiced their ideas and proposals regarding the State Budget Bill for next year.

Minister of Finance Samir Sharifov and Chairman of the Board of the Central Bank Elman Rustamov responded to the MPs’ comments towards the end of the meeting. Then, Chairman of the parliamentary Committee for Economic Policy, Industries and Enterprising Tahir Mirkishili mentioned that the 2021 budget of the Unemployment Insurance Fund would equal AZN 157 mn and that the living wage would be set at AZN 196 – AZN 207 for the employable population, AZN 162 for pensioners and AZN 175 for children. He said also that the limit need tested to underlie targeted social aid appointments would be set at AZN 170 next year.

In the end, it was recommended that the 2021 State Budget of the Azerbaijan Republic Bill, the Budgetary Parcel’s Bills ‘On the 2021 Budget of the Unemployment Insurance Fund’, ‘On the Living Wage in the Azerbaijan Republic in 2021’ and ‘On the Limit Need Tested in the Azerbaijan Republic in 2021’ and the draft amendments to the Law ‘On the Budgetary System’ be submitted to the Milli Majlis for the first reading.

The Press and Public Relations Department
The Milli Majlis