Economic Outlook and Budget Process


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Economic Outlook and Budget Process by Fuad Ganjaliyev, Head of the Budget Department, Ministry of Finance, Azerbaijan

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Economic Outlook and Budget Process

  1. 1. Republic of Azerbaijan
  2. 2. 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)
  3. 3. 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
  4. 4. Socio-economic indicators 2010 e GDP real growth 2011 e 2012 e 2013 f 2014 f bln. USD 52.9 66.0 68.7 69.7 74.7 per cent 5.0 0.1 2.2 4.5 5.2 5922.0 7155.6 7490.5 7706.2 7793.1 GDP per capita USD CPI per cent 5.7 7.9 1.1 3.3 5.5 - 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 Share of state budget in GDP
  5. 5. Socio-economic indicators, end of September 2013 2013, 9 months GDP real growth bln. USD 54.8 per cent 5.4 GDP per capita USD 5871.4 CPI per cent 2.9 bln. USD 18.4 per cent 33.5 bln. USD 16.3 share in GDP per cent 29.8 International reserves bln. USD 49.4 State budget - revenue share in GDP - expenditure
  6. 6. The budget process
  7. 7. 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.
  8. 8. Structure of budget Consolidated budget State budget Centralized revenue and expenditure Budget of Nakhchivan Autonomous Republic Local revenue and expenditure Budget of State extrabudgetary funds State Social Protection Fund Projects financed by foreign credits State Oil Fund
  9. 9. 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
  10. 10. 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
  11. 11. 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
  12. 12. 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
  13. 13. 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
  14. 14. 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
  15. 15. 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)