Analysis of fluctuation of the budget of Azerbaijan and its political consequences

International institute of khazar sea studies (IIKSS) - Currently, the economy is one of the most important index of the assessment of countries and also one of the areas of competition between countries. The Ability and possibility of countries and their citizens also have a close relationship with budget per capita that the state spends on them. Because thus the level and extent of welfare and services which are provided to citizens and also the level and extent of citizens' economic efficiency are measurable.

As shown in the infographics below, budget of Azerbaijan Republic after strong growth in 2008, which had been caused by sale of oil through the Baku-Tbilisi-Ceyhan pipeline, has reached its maximum size and potential. It is natural that it is possible to see the impact of this growth on the situation and livelihoods, work, welfare, social security, services, infrastructures and all financial and non-financial sectors of this Republic. On the basis of the following schedules, as can be seen, the budget's growth means growth of budget per capita.

But it should be noted that, the Azerbaijan’s budget per capita and its size also varies greatly due to dependence of the Azerbaijan’s budget on oil. Considering the Azerbaijan’s budget per capita in recent years, we observe a very sharp fluctuation in budget of this Republic in 2009, which, naturally, had a significant impact on its budget per capita.

The Republic had successful to increase the budget per capita from 100 $ per person in 1997 to 2,800 $ per person in 2008. At that time, the inactive population of this republic was 53% of the total population. Suddenly, with the advent of the 2008 crisis, the budget per capita in this republic fell from 2,800 $ in 2008 to 2,000 $ in 2009.

But then, with economic reforms there was a significant growth in these indices. This figure in 2010 increased to the level of 2008, and we have seen in this year a budget per capita of 2700 dollars and a budget per capita of 3200 dollars in 2011, which is unparalleled in Azerbaijan. But, contrary to expectations, these dream days for the Azerbaijani economy did not last, and for nearly three years this number remained at $ 3,100.

Though this figure was considered as a good record for Azerbaijan, it was seriously far from the best situation in the world in those years. In other words, Azerbaijan's budget per capita in 2014 was far from the best indices in the world by 16.5 times, in 2013 – by 16 times and in 2013 and 2012 - almost by 15.5 times. It means that after 2009, one of the most ideal budget per capita in the world fell every year, and only in 2013 could reach an index of 6,5 of 100 and could have the shortest distance from the best index in the world.

Thus, according to the existing figures, it can be said that budget and budget per capita of Azerbaijan are in a critical situation. Because since 2014, with the fall of oil prices, budget and budget per capita of Azerbaijan have decreased each year, and in 2016, this figure has surprisingly to 1100 dollar per person. More precisely, with regard to the decrease in Azerbaijan's budget, it can be assumed that with what catastrophic situation this republic will face in the sphere of the state economy. Even these tensions have also affected gross domestic product (GDP) of this republic. Because the graphs show that GDP per capita has fallen from $ 8,000 in 2014 to $ 3,800 in 2016, which is roughly equal to its size in 2006.

Author: Maysam Araee Daronkola - faculty member of Payame Noor University and director of the International Institute of Khazar Sea Studies (IIKSS)
Translator: Mohsen Hamidi - expert and member of the Scientific Council of the International Institute of Khazar Sea Studies (IIKSS)