Finance

Finance

Chairman of Central Bank of Azerbaijan: Main target for 2010 is to eliminate aftermath of crisis

10 November 2009 13:36 (UTC +04:00)

Milli Majlis Speaker Ogtay Asadov described the state budget for 2010 as social, investment and defence oriented.

According to him, Azerbaijanâ€™s GDP growth rate exceeds 6%, the highest rate in the CIS area.

â€œThe private sector accounts for 85% of production. The state budget blueprint is prepared in accordance with the realities and taking into account the crisis. The price of oil is also envisaged at a level which is in accordance with the realities,â€ he added.

Ziyad Samadzade, chairman of a parliamentary committee on economic policy, introduced the draft for discussion.

In his words, Azerbaijanâ€™s state budget revenue for 2010 is projected at AZN 10 015 million, expenditure at AZN 11 264 million, budget deficit at AZN 1 249 million.

He added that inflation is expected to be 3% in 2010.

He praised the governmentâ€™s foreign debt policy, saying Azerbaijan is the lest indebted country in the world.

According to him, the budget gap accounts for 3% of GDP and is an admissible level in the world practice.

Finance Minister Samir Sharifov said the global trends, oil price forecasts and international institutionsâ€™ outlook are taken into account in the budget bill.

â€œTo pursue fiscal and monetary policy to maintain the macroeconomic stability is one of the priorities of 2010,â€ he added.

He added that it is planned to reduce some tax rates and raise simplified taxation level to AZN 150 000 from AZN 90 000.

Under the bill, the main sources of the budget revenues are the State Oil Fund (AZN 4 915 million), VAT (AZN 1 876 million), corporate profit tax (AZN 1 096 million), individual income tax (AZN 680 million), excise tax (AZN 552 million).

Tax proceeds will come 38.4% from oil sector and the rest from other sectors. The customs proceeds are forecast at AZN 1.1 billion.

The public capital investment accounts for AZN 3 549 million of the budgetary expenditures.

In addition, AZN 1 276.8 million will go to education, AZN 1 205.8 million to defense, AZN 1 192.3 million to social security, AZN 1 042.3 million to general government services, AZN 707.4 million to law enforcement and the judiciary, AZN 479.4 million to healthcare.

Sevinc Hasanova, Deputy Minister of Economic Development, the budget is built on the oil price forecast of $45/barrel as conservative approach.

Speaking about the macroeconomic indicators, she said that the oil sector is forecast to grow by 8.3%, and non-oil sector by 4.94% in 2010.

Azerbaijan’s oil output is projected to be 53 million tons and natural gas â€“ 27.2 billion cubic meters, the growth of industry 7.8%.

She added that foreign trade turnover will reach $24 billion, the surplus of trade turnover - $7.7 billion, the favourable balance of payments - $1 billion.

Elman Rustamov, Chairman of the Central Bank, said that Azerbaijan has demonstrated a high immunity against the global financial crisis in 2009.

As a result of the actions taken, the drastic declines in monetary indicators have been averted. During the first two quarters the money supply increased by 12%, and AZN 1.4 billion was injected to the economy.

"During the crisis, the central bank has supported large enterprises in servicing their external debt. We are currently working on a program of assistance to private banks.

According to him, Azerbaijani banks attracted $2.5 billion from abroad during the pre-crisis period, of which $1.5 billion dollars has already been repaid.

He also stressed that despite the crisis the country resumed mortgage lending to support construction companies.

1,400 families (150 from privileged social group) have taken out mortgage loans totaling AZN 61 million.

"Most countries were faced with the currency devaluation during the crisis. However, the manat dropped by only 0.3% against rhe US dollar. It almost remained stable. In general, the manat strengthened by 1% against the currencies of our trading partners,â€ he added.

He also noted that the main focus will be on the elimination of the aftermath of the crisis and maintenance of liquidity support.