Optimal oil price set in Azerbaijan's 2012-state budget

On the backdrop of the global processes and variability of the world oil prices, the forecast on oil prices, based on which the basis of forecasts on the state budget and the consolidated budget for 2012 are formed, is set by the Azerbaijani government at the level of $ 80.

This indicates that Azerbaijan continues to adhere to conservative policy and is not a supporter of a significant increase in oil prices in predicting the budgetary targets. However, the practice of oil prices review in the state budget during the year is applied in Azerbaijan. Thus, depending on the situation on the world markets, oil prices was increased from $45 to $60 per barrel in 2010 and in 2011 - $ 60 to $80 as a result of adjusting the budget forecasts.

Oil factor plays an important role in the formation of Azerbaijan's state budget revenue part, where the bulk of this factor is formed through transfers of the State Oil Fund (SOFAZ). The oil price do not affect the transfers, but it affects the SOFAZ assets, and fund transfers fixed size of the transfer regardless of whether the price reaches a barrel, $80, $100 or $ 20.
The transfers from the SOFAZ in 2012 are expected to reach 9.9 billion manat or 60.3 percent of total revenue in the budget. Thus, their volume will exceed the amount expected in 2011 by 0.7 billion manat or 7.6 percent.

Taking the oil price at $ 80 per barrel as the basis, the Azerbaijani government, firstly, the cautiously approaches to the formation of the 2012- state budget and secondly, the price at $ 80, as the current practice shows, is the best and will protect the budget against the risks in the new wave of economic crisis.

Usually, when planning the budget the international practice takes the price by $10-15 percent lower than market price for oil. This provides some "cushion". Even if the price falls dramatically, then it will be possible to fund all necessary expenses.
Earlier in June, the Azerbaijani President approved amendments to the 2011- budget, where among other things, the basic price of oil in Azerbaijan's state budget has been increased to $ 80 per barrel from $60.

Opportunities of the world oil market remained favorable, due to which the cost of one barrel of Azerbaijani oil exceeded the price set at the state budget for 2011 by more than 80 percent.

Thus, additional revenues of the State Oil Fund of the Azerbaijan Republic totaled 976.4 million manat in the first quarter of 2011 compared to 193.5 million manat projected earlier.

Based on the Azerbaijani Accounting Chamber, additional 5 billion manat is expected to be received as a result of adjusting the oil prices


Ellada Khankishiyeva
/Trend/