Azernews.Az

The projected oil price on Azerbaijan`s budget has exceeded world crude prices for the first time in recent years. The figure has been set at $70 a barrel for the country`s 2009 state budget, topping the current level of around $60 as seen on world markets.
Heydar Asadov, Chairman of the Accountancy Chamber, has said setting the price at $70 will cause no problems in the future.
"We have carried out a number of calculations and determined that even if the price goes down to $50 next year, this will not cause problems for the execution of the budget," Asadov said during discussions on next year`s budget draft in parliamentary commissions last week.
Elaborating on his conclusion, he said that if crude prices continue to fall, prices in world markets will decrease as well, causing a reduction in the value of infrastructure projects envisioned by the budget. In other words, the equipment to be purchased for construction work and technologies to be introduced will become cheaper, which will be accompanied by a reduction in the budgets of various projects.
Asadov said another reason preventing the harmful impact of falling crude prices on budget programs was the fact that most of the fields that will receive revenues from the state budget are not dependent upon oil, including taxes, revenues from privatization and customs duties that will be collected, as initially planned, without sustaining the impact of oil price fluctuations.
Additionally, Asadov cited how budget items rarely use 100% of their budgeted funds.
"Every year, 97-98% of spending can be executed, in the best case-scenario. A minimum of an extra 300-500 million manats ($617 million) worth of treasury funds will, therefore, remain from the 2008 state budget. If this remainder is added to next year`s budget, and next year`s treasury remainder is also taken into account, the government will have considerable funds at its diposal. As a result, falling oil prices will have no tangible impact on the budget`s execution."
According to the Chamber chairman, there are other funds available to fend off the slump in oil prices.
"If the oil price plummets, the government may revisit its contributions to investment projects at the end of the year, as this process is carried out not once, but in four stages throughout the year. This measure should prevent the damage in question. In a nutshell, setting the oil price at $70 a barrel in next year`s budget is nothing to worry about. What I have enumerated will allow to ward off any risks," Asadov said.