Republic of Azerbaijan

General information

• Country name – Azərbaycan Respublikası – the Republic of Azerbaijan

• Area – 86.6 thsd. sq. km

• Population – 9442.5 thsd people (end of September, 2013)

• Capital – Baku

• State language – Azerbaijan

• Religion – separated from state, all religions are equal

• Currency unit – manat, AZN (1 USD=0.78 AZN, 1 euro=1.05 AZN)

• Location – south-eastern part of Southern Caucasus

• Neighbour countries – Armenia (1007 km), Georgia (480 km), İran (756 km), Russia (390km), Turkey (13 km)

Branches of power

• Legislative power – Milli Majlis (Parliament), 125 Deputies, elected by direct elections for 5 year terms

• Executive power

– Head of State – President, elected by direct elections for a 5 year term. Executive powers belong to the President.

– Head of Government – Prime-Minister, appointed by the President, by consent of the Milli Majlis. The President establishes the Cabinet of Ministers. The Cabinet of Ministers is subordinate to the President and reports to him.

• Judicial power – Constitutional Court, Supreme Court, Courts of Appeal and other specialized courts

Socio-economic indicators 2010 e 2011 e 2012 e 2013 f 2014 f

GDP bln. USD 52.9 66.0 68.7 69.7 74.7

real growth per cent 5.0 0.1 2.2 4.5 5.2

GDP per capita USD 5922.0 7155.6 7490.5 7706.2 7793.1

CPI per cent 5.7 7.9 1.1 3.3 5.5

Share of state budget in

GDP

- revenue per cent 26.9 30.2 32.0 35.0 31.4

- expenditure per cent 27.7 29.6 32.3 36.3 34.3

Socio-economic indicators,

end of September 2013

2013,

9 months

GDP bln. USD 54.8

real growth per cent 5.4

GDP per capita USD 5871.4

CPI per cent 2.9

State budget

- revenue bln. USD 18.4

share in GDP per cent 33.5

- expenditure bln. USD 16.3

share in GDP per cent 29.8

International reserves bln. USD 49.4

The budget process

Legislative acts on the budget

process

• Constitution of the Republic of Azerbaijan

• “Law on Budget System”, July 2, 2002 (made several amendments for improving budget and increasing transparency)

• Rules on preparation and execution of state budget, CoM Degree, № 75, May 24, 2004

• CoM degree on drafting state and consolidated budget (annual)

• Budget classification, CoM Degree, № 149, October 6, 2004

• Tax Code and etc.

Structure of budget

Consolidated

budget

State budget

Centralized

revenue and

expenditure

Local revenue

and expenditure

Budget of Nakhchivan

Autonomous Republic

Budget of State

extrabudgetary

funds

State Social

Protection Fund State Oil Fund

Projects financed by foreign credits

Budget process

• 3rd week of January – Cabinet of Ministers issues a decree on starting the draft budget process

• End of February – Ministry of Economy and Industry corrects medium-term socio-economic

development program

• March – Initial medium-term budget and investment program is prepared

• till April 15th – The initial drafts of the State Budget and investment program along with the main

directions of fiscal policy, indication of the highest levels of revenues and expenditures according to sector level of budget classification, the state debts, priority expenditures, consolidated budget forecast for the next year and subsequent three years, are submitted to the Cabinet of Minister for their consideration

• Till May 1st – Ministry of Finance prepares and sends out an instruction letter on budget

preparation to line ministries

– The instruction letter includes:

• Expenditure limits on organizations and every sectors, approved norms on current expenditures, forms, supporting documents, etc

Budget process (cont.)

• Till July 1st – Budget project should be submitted to the Ministry of Finance by

organizations, involved in revenue collections and financed from the State Budget

• July - August

– Discussion of the budget project with line ministries. Based on discussion a protocol is signed

• Till September 15th

– MoF submits a draft State Budget to Cabinet of Ministers for the following year and indicators for a consolidated budget for the subsequent 3 years

• Till September 25th – Cabinet of Ministers submits a draft State Budget to the President for the

following year and indicators for a consolidated budget for the subsequent 3 years

• Not later October 15th – President submits draft State Budget to Parliament for the following year

and indicators for consolidated budget for the subsequent 3 years (Constitution of AR, article 109.2)

• Till December 20th

– Milli Majlis (Parliament) appoves draft State Budget for the following year

Documents to be prepared and submitted together with

the draft State Budget

• Draft law on the State Budget for following year and explanation on that

• Socio-economic development concept and forecast indicators of Azerbaijan Republic for the following and subsequent 3 years

• Main directions of fiscal policy

• Targeted programs to be financed by resources of State Budget

• Draft budget on revenue classification, and expenditure with breakdown by functional, economic and organizational items

• Information on the state debts, state guaranteed and other liabilities

• Draft consolidated budget for the following year and subsequent 3 years

• Consolidated financial balance sheet for the whole territory of Azerbaijan Republic

• Draft laws on budgets of extra-budgetary state funds for the next budget year

• Compare of the next budget year revenues and expenditures with the actual results of the previous year and expected results of the current year (according to the revenues classification, at the paragraph level of functional, economic and organizational classification of the expenditures) and etc.

• other documents that the President considers expedient

Transparency in budget process

• Publication of CoM degrees on drafting state and

consolidated budget

• Open session of MM

• Discussion and debate on mass media, TV

• Publication of reports on budget execution

• Publication draft budget law

• Publication of annual budget and its execution

• Presentation of draft state and consolidated budget

• Citizen budget

Reforms starting from 2011

• Improvement of budget classification

• Presentation of draft state and consolidated budgets were

prepared and published on the official web page of the

Ministry of Finance of the Republic of Azerbaijan before

submitting them to the Parliament

• Submission to the Parliament midterm of state and

consolidated budget (by revenue classification and

functional classification of expenditure)

• Detailed breakdown of state investment expenditures were

submitted to the Parliament of the Republic of Azerbaijan.

• Increased the share of program budget expenditure

• Adding data on consolidated budget to execution report of

state budget

Chamber of Accounts

• Independent state supreme audit body

• Organizational structure (Authority to audit all

organizations, including extrabudgetary funds and secret

(defence and national security) bodies)

• Memorandum between CoA and MoF

• Resolution of MM on budget of CoA

• Opinion on draft budget and budget execution

Milli Majlis (the Parliament)

• High level of legislation body, independent from

executive power

• Resolution of MM on budget of MM

• Discussion of draft budget and budget execution

• Authority to make amendments to draft budget – Draft budget - 16 984,4 mln AZN (2012), 19810,0 mln. AZN (2013)

– Adopted budget – 17 072,0 mln AZN (2012), 19850,0 mln. AZN (2013)

– Revised budget – 17 672,0 mln. AZN (2012)