Medium Term Budget Planning Framework Azerbaijan
The engagemen supports Azerbaijan in making public spending more effective, predictable and sustainable. It will enhance capacity for macroeconomic planning, managing public investments, understanding debt sustainability and increasing transparency. The project capitalizes on SECO’s cooperation with the authorities on Financial Programming (FP).
Fiscal policy in Azerbaijan has been volatile and failed to nurture sustainable growth in the non-oil/gas sector. The Government remains dependent on hydrocarbon revenue, which is subject to large swings. These have translated into spending booms and busts with detrimental effect on the economy. Moreover, they have bred short-termism in government decisions and hampered multi-year planning. The process and quality of macroeconomic and fiscal forecasting requires an upgrade. Azerbaijan’s budget planning process needs to be strengthened. The effectiveness of public investment and the transparency & accountability of the budget need to improve.
The population in Azerbaijan benefits from better public service delivery due to improved efficiency, sustainability, strategic orientation and transparency of public expenditure.
Medium-term forecasting is improved, the resource envelope is adequate to the economic outlook, the assessment of economic developments is comprehensive and systematic and the fiscal framework is consistent with macroeconomic developments.
Projects are developed and prioritized in a manner that ensures impact, cost efficiency, value for money and societal value, projects are implemented in a sustainable, efficient and effective manner, and the use of public-private partnerships are conducted on a good practice basis.
A more strategic budgeting process with improved links between strategic priorities and budget and an improved budget performance orientation is secured.
Improved budget oversight practices, improved quality of budget information published and enhanced quality control and assurance with respect to audits.
Government’s capacity to adopt the medium-term budgeting reform is strengthened.
Capacity for medium-term forecasting strengthened, general government medium-term resource envelope developed, capacity for economic monitoring and reporting strengthened, capacity for fiscal policy analysis strengthened.
Increased capacity in central ministries and public investment processes, capacities tools, and systems strengthened, increased capacity to use private finance in delivering public infrastructure services strengthened.
Sectoral Strategic Plans developed, baseline and new policy initiatives procedure and capacity developed, Medium-Term Budget Planning document procedure and capacity developed, spending priorities process and capacity developed, program budgeting standards, processes and capacities implemented, budgeting processes enhanced.
Chamber of Accounts’ knowledge of the new framework and capacities to oversee the budget process increased, budget transparency and citizen engagement in the budget process increased, framework for Chamber of Accounts system.
Results from previous phases:
The program builds on SECO’s long-standing technical support in macroeconomic management. SECO experts have assisted the four main policy-making institutions in building macro-fiscal forecasting models. Financial Programming has become a common language of understanding among these institutions. Forecasting skills have improved in recent years and made institutions more receptive of medium-term planning. The time is therefore right to increase significantly technical capacities in the field of public financial management in the country.
|Directorate/federal office responsible||
|Budget||Current phase Swiss budget CHF 5’000’000 Swiss disbursement to date CHF 0 Budget inclusive project partner CHF 5’300’000|
|Project phases||Phase 4 01.02.2021 - 02.02.2026 (Current phase)|