What is changing in the updated state budget?
At the end of last year, when this year’s state budget was approved, the price of a barrel of oil was estimated at $ 50. Russia’s attack on Ukraine and European sanctions against Russia have pushed up energy prices. For a long time, oil has been sold for more than $ 100 per barrel. This year, the average export price of Azeri Light crude oil was $ 106 per barrel, which is twice higher than the budget. Of course, this means additional income for resource countries such as Azerbaijan. After all, about half of budget revenues are transfers directly from the oil fund. The increase in natural gas prices has for the first time allowed Azerbaijan to earn as much from the sale of this fuel as from the sale of oil. In addition to revenues from oil and gas sales, the amount of funds collected through the State Tax Service exceeded forecasts by 2 billion manat.
According to official figures, budget revenues in the first five months of this year amounted to 12 billion 442 million manat. However, at the beginning of the year, this figure was projected at 11 billion 227 million manat. So, For 5 months, the budget received 1 billion 215 million manat, or 11 percent more. The volume of budget revenues in 2022 is 28 percent higher than the same period last year. Along with budget revenues, revenues from foreign trade also increased sharply. In the first five months of this year, the volume of foreign trade transactions ($ 16.8 billion) increased by 74% compared to the same period in 2021. As a result of all these factors, the government has decided to amend the 2022 state budget. The new calculation envisages the price of oil at $ 85 per barrel.
The government expects that the state budget will receive more funds this year after the amendments. The state budget is expected to receive an additional 2 billion 40 million manat from oil sales. Non-oil revenues are expected to exceed 1 billion 534.3 million manat and the state budget will receive an additional 3 billion 574 million manat. Preliminary indicators of the Ministry of Finance’s changes to the budget have already been announced. What will change in the state budget after those changes?
According to updated forecasts, the government will spend 2.67 billion manat on reconstruction in Karabakh this year. In the initial version of the budget, this figure was set at 2 billion 200 million manat. In other words, With the new amendments, the amount of funds allocated for reconstruction projects in Karabakh will increase by 470 million manat or 21.4 percent. These funds are included in the state budget in the article “Construction and urban planning costs.” One of the areas where the most funds are allocated in the new amendments is the item “construction and urban planning costs”. With the changes in the budget, construction costs will increase by about 1 billion manat. The government plans to allocate 5 billion 972 million manat a year in this direction. In addition to the funds allocated to Karabakh, state capital investment (investment expenditures) is also included in this expenditure item.
The updated budget forecasts also show a significant increase in defense spending. According to the updated forecasts, the government plans to allocate a total of 5 billion 85 million manat in this area in 2022. This figure is 595 million manat or 13.2 percent more than announced at the beginning of the year. Expenditures on the judiciary, law enforcement and the prosecutor’s office were set at 2.482 billion manat. This is 49.6 million manat or 2 percent more than the forecast approved last year. Expenditures on social security and social protection in 2022 increased by only 86 million manat or 2.4 percent compared to the initial budget.
The updated budget forecasts also show a significant increase in defense spending. According to the updated forecasts, the government plans to allocate a total of 5 billion 85 million manat in this area in 2022. This figure is 595 million manat or 13.2 percent more than announced at the beginning of the year. Expenditures on the judiciary, law enforcement and the prosecutor’s office were set at 2.482 billion manat. This is 49.6 million manat or 2 percent more than the forecast approved last year. Expenditures on social security and social protection in 2022 increased by only 86 million manat or 2.4 percent compared to the initial budget.
According to the updated forecasts of this year’s state budget, Health expenditures are set at 1 billion 709 million manat. This is 79.8 million manat or 4.5 percent lower than the previously approved budget forecast. The indicators in the field of education have not changed much. According to the updated forecasts, the funds allocated for education have been increased by only 2 million manat (0.06 percent). In 2022, a total of 3 billion 887 million manat is expected to be spent on education. Another area with a slight increase in expenditures is agriculture. The funds allocated from the state budget for agriculture have increased by only 18,000 manat compared to previously approved figures and amounted to a total of 997 million manat.