Azerbaijan Republic: Selected Issues and Statistical Appendix

International Monetary Fund

doi:10.5089/9781451802634.002.A004

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Azerbaijan Republic: Selected Issues and Statistical Appendix

Author: International Monetary Fund

Publication Date:: 19 May 2003

eISBN:: 9781451802634

Language:: English

Keywords:: ISCR; CR; manat; tax rate; Azerbaijan; profit tax; advance payment; entrepreneurial activity; Income; Income and capital gains taxes; Value-added tax; Tax law; Property tax

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This Selected Issues paper and Statistical Appendix for Azerbaijan aims to provide a guide to the management of Azerbaijan’s expected natural resource-generated windfall. The paper provides information on Azerbaijan’s endowment of oil and gas deposits and the projected revenue stream, and highlights the common characteristics of policies leading to the mismanagement of natural resource wealth in natural resource-abundant countries. It also outlines a medium- and long-term policy strategy for oil wealth management in Azerbaijan.

Abstract

IV. Tax Policy in Azerbaijan—Regional Context and Recent Developments

95. During the last few years, reforms in CIS countries gave tax policy systems the principle characteristics of systems in modern market oriented economies. After a first round of tax reforms in the early 1990’s, modern tax codes were introduced in a second round of reforms in the late 1990’s (e.g., Russia, the Kyrgyz Republic, and Georgia), which laid the foundation for simple and straightforward tax systems. In Azerbaijan a fundamentally revised tax code based on international standards was adopted in 2000. Its implementation has been supported by significant reforms in revenue administration.¹⁴

96. In most CIS countries these reforms were accompanied by significant changes in income tax rates. During the last five years, the individual income and profit taxes underwent substantial modifications. Most countries consolidated the number of income tax brackets and lowered the top bracket to around 20 to 25 percent. For the profit tax, rates were unified around 20 percent, which is somewhat low by international standards. In line with these general tax policy trends, Azerbaijan has recently reduced its profit tax rate from 27 percent to 25 percent, and has also introduced regional and sectoral discounts ranging from 40 to 80 percent of the base rate. In the short run these concessions are partially offset by reductions of generous depreciation allowances.

97. The dominant source of tax revenue among transition economies continues to be the VAT. VAT rates have been largely unchanged in the last years, with most countries maintaining a basic rate of 20 percent. Steady increases in registration thresholds have simplified operations and greatly improved the functioning of the VAT. In Azerbaijan the general rate for VAT is somewhat lower, at 18 percent, and also includes wide-ranging exemptions. A recent reduction in the registration threshold level was reversed primarily due to the increased administrative burden. Reforms have shifted toward building a more effective tax system for small tax payers.

98. Despite these accomplishments Azerbaijan still faces important challenges in various tax policy matters. Income and profit tax rates need further adjustments. The tax burden on wage income is large due to high social contribution rates. Reductions will require the development of a broad reform agenda including changes to expenditure policy. The government has also decided to re-unify profit tax rates in 2004. In this context further changes in the base profit tax rate could be considered. In the past exemptions from VAT have been granted on an ad hoc basis and a more systematic approach is needed. Finally, the government needs to review the appropriateness of the tax laws for SOCAR in the light of SOCAR’s increasing ability to pay its taxes in cash due to reforms in the domestic energy sector.

A. Tax Matrix

TYPE OF TAX	NATURE OF TAX	SPECIAL RULES, EXEMPTIONS, ALLOWANCES, AND DEDUCTIONS	GENERAL RATES
1. PERSONAL INCOME TAX	Resident and non-resident physical persons are tax payers of the income tax. Residents pay taxes on worldwide income, non-residents on income from domestic sources. Income is defined as (i) wages including the monetary value of in-kind compensation and life insurance premia, and (ii) income from non-employment activity, interest, dividends, royalties, and (iii) all other income, which is not specifically exempt.	The following forms of income or persons are exempt: Income of diplomatic or consular employees; Gifts, financial aid, and inheritances state transfers, pensions, scholarships and allowances, alimony, and income from the supply of non-precious tangible movable property. Income from insurance premia, supply of real estate if occupied for at least three years. Compensatory payments in connection with damages, gifts, financial aid and inheritance if given threshold not exceeded. Income from agricultural production. Income from individual producers of copper, tin, pottery, utensils etc. Income of military servants. Winning prize from state lottery. Official representatives of foreign states. Other exemptions can be implemented by the appropriate executive authority such as a 3 year tax holiday for owner-operated farms. Reduced income base by 20 times non-taxable amount of wages: National heroes, veterans, widows of servicemen, people with illnesses related to Chernobyl accident. Reduced income base by 5 times of non-taxable amount of wage: 1^st and 2^nd categories of invalids other than war invalids. Reduced income base by 3 times non-taxable amount of wages: Parents and widows of veterans. Afghan war veterans. Internally displaced persons. Families with at least 3 children in guardianship can deduct 1 times the non-taxable amount of wages.	The following rates apply January 2002 for different income brackets:
	0%		under 100,000
	12%		100,000-1,000,000
25%	1,000,001-5,000,000
35%	5,000,001 and above
Tax on gross wage income is collected at the source of payments through withholding from wage, salary, dividend and interest income. For interest and dividend income a withholding tax of 10 percent is applied, which fully covers the tax obligation from these sources.
Resident physical persons who receive income from entrepreneurial activity file tax returns and make advance payments within the 15th day after the end of each quarter.
2. PROFIT TAX	The profit tax is paid by resident and non-resident enterprises. The tax code specifies a base tax rate and discount for enterprises operating outside the capital or in specific sectors. Regional tax concessions require physical production in the area.	Exemptions Charitable organizations, donations, gratuitous transfers, non-commercial membership fees. Profits of the national bank, income from international organizations, and from state authority and budgetary organizations. Concessions Taxes are half rate for organizations with 50% of employees from social organizations. Deductions Expenses connected with earning income. Certain types of bad and doubtful debt. Allocations to a reserve fund for insurance companies with exceptions. Expenses on scientific-research, experimental construction, and costs incurred by geological exploration, and expenses on intangible assets. Depreciation of capital stock with accelerated schedule for some items. Repair expenses and costs incurred for geological exploration. Carry over of losses exceeding income of a given year to the next year for up to 5 years.	Profits tax rate at 25%. Discounts on the tax rate 80% in cities outside Baku 40% in mountainous regions 60% in other districts 80% for tourism activities 40% for handicraft and woodwork craftsmanship
2. PROFIT TAX	Profits are defined as the difference between income and allowed deductions specified in the tax code. Tax payments are made quarterly within 15 days after end of each quarter and a final adjustment is made after the end-year income statement has been submitted at the end of the first quarter of the following calendar year. Quarterly tax advance payments are determined by using one of two methods: (i) by multiplying the volume of income times the ratio of last year’s profit tax over income, or (ii) by using ¼ parts of previous year’s paid profit tax.
3. VALUE ADDED TAX (VAT)	The VAT is implemented through a credit-invoice mechanism and applies to goods and services within the country as well as to imports.	The following activities or items are exempt from VAT. Property purchase in the process of privatization. Financial services including leasing. Supply of national and foreign currency. Imports of gold, foreign currency and similar items. Imports of capital investments. Services of state and other official authorities. Purchases or sales connected to mass media products, editing, publishing, printing, services related to funeral ceremonies. Activities of international organizations. Imports by the national bank. Transactions of fixed and moveable assets to the State Oil Fund Other imports can be exempted by appropriate executive authority such as agricultural products. Zero-rated items or activities. Goods and services of foreign official establishments and representatives. Activities related to humanitarian aid. Exports of goods and services. International transportation of cargo an passengers. Dispatch of gold and other valuables to ANB.	18% uniform
	VAT registration is required if the value of transactions for the previous 3 months exceeds 1250 times the minimum tax-exempted wages. This is equivalent to an annual turnover of $US 100,000 at end 2002 exchange rates.
	VAT applicable activities include brokerage fees and gratuitous transfer of goods and financial assistance.
4. EXCISE TAXES	All enterprises and physical persons producing or importing excisable goods are taxpayers. The tax code defines drinking alcohol, tobacco products and oil products as excisable goods.	Exemptions Imports of less than 3 liters of alcohol, three packs of cigarettes and fuel in car for personal use. Imports related to humanitarian aid. Goods in transit and temporary imports. Zero-rated items or activities. Export of excisable goods.	Tax rates are determined by the relevant executive authority body.
5. ROYALTY TAX	Tax based on utilization of underground mineral resources payable by resident and non-resident individuals and enterprises.	Royalty is not paid on oil or gas exports from the international consortium of oil producers (AIOC). Royalties on oil and gas production from the state owned oil company (SOCAR) are limited due the use of a negotiated tax target for SOCAR. Concession of 50% of base rate Enterprises and individuals producing mineral water in mountainous regions.	26% on value of crude oil 20% on value of natural gas Other minerals and materials: 3-10%
6. LAND TAX	Tax levied on land plots owned by resident and non resident physical and legal persons.	Exempt are Land in common use of residential areas. Land of state authority bodies and budgetary organizations and national bank. Lands of state forestry and water funds. State boundary land strips and land used for defense. Land tax reduced by 50% on non-taxable amount of monthly income, if owner exempt from income tax	Rates differ by region and type of land use.
7. PROPERTY TAX	Paid by resident and non resident physical persons and enterprises on the value of property owned including buildings and vehicles.	Exempt are Buildings of the state authority, national bank, and public organizations of invalids. Workshop premises of physical persons who are engaged in a list of activities such as making pottery, tin etc. Buildings with a value of less than 300 times the non-taxable amount of monthly income. Concessions For military service men, pensioners and people who receive income tax concessions the amount of property tax is reduced by 1.5 times the non-taxable amount of wages. Small scale entrepreneurial activity of physical persons. Deductions for enterprises for the property value of buildings used for environmental protection, civil defense, fire safety, pipelines, railways, roads, land irrigation, communication, vehicles trolley buses and trams, buildings for health, education, and sport and fixed asset depreciation. Property tax is reduced by 50% if exempt from income tax.	Property tax obligation: Buildings: 0.01% of the value of a building Water and air transportation: 0.02% times non-taxable monthly wages per 1 sm3 of engine; 1% of market price for motorless water and air facilities. Cars and trucks: 0.01 % (0.02% for trucks) of non-taxable monthly wages per 1 sm3 of engine
8. STATE ROAD TAX	Tax for use of roads levied on vehicles from foreign states entering the country.		Rates depend on type of vehicle, period of stay in country, and cargo of trucks.
9. SIMPLIFIED TAX	Taxpayers are enterprises not registered for VAT purposes due to low turnover and passenger and cargo transportation including taxis. The subject of taxation is volume of turnover during the reporting period.	Taxpayers of the simplified tax do not pay VAT, profit, property and land tax.	4% of gross turnover in Baku 2% of gross turnover in other areas 10% of gross turnover for passenger and cargo transportation
10. EXPORT TAX	Tax paid on revenue markup over domestic prices of crude oil and oil products exports. Tax is assessed on the difference between export value minus export costs and value at domestic wholesale prices.	Legally not part of the tax code. Re-introduced in 2003 in the annual budget law. Applies only to SOCAR.	20% of value difference

TYPE OF TAX	NATURE OF TAX	SPECIAL RULES, EXEMPTIONS, ALLOWANCES, AND DEDUCTIONS	GENERAL RATES
1. PERSONAL INCOME TAX	Resident and non-resident physical persons are tax payers of the income tax. Residents pay taxes on worldwide income, non-residents on income from domestic sources. Income is defined as (i) wages including the monetary value of in-kind compensation and life insurance premia, and (ii) income from non-employment activity, interest, dividends, royalties, and (iii) all other income, which is not specifically exempt.	The following forms of income or persons are exempt: Income of diplomatic or consular employees; Gifts, financial aid, and inheritances state transfers, pensions, scholarships and allowances, alimony, and income from the supply of non-precious tangible movable property. Income from insurance premia, supply of real estate if occupied for at least three years. Compensatory payments in connection with damages, gifts, financial aid and inheritance if given threshold not exceeded. Income from agricultural production. Income from individual producers of copper, tin, pottery, utensils etc. Income of military servants. Winning prize from state lottery. Official representatives of foreign states. Other exemptions can be implemented by the appropriate executive authority such as a 3 year tax holiday for owner-operated farms. Reduced income base by 20 times non-taxable amount of wages: National heroes, veterans, widows of servicemen, people with illnesses related to Chernobyl accident. Reduced income base by 5 times of non-taxable amount of wage: 1^st and 2^nd categories of invalids other than war invalids. Reduced income base by 3 times non-taxable amount of wages: Parents and widows of veterans. Afghan war veterans. Internally displaced persons. Families with at least 3 children in guardianship can deduct 1 times the non-taxable amount of wages.	The following rates apply January 2002 for different income brackets:
	0%		under 100,000
	12%		100,000-1,000,000
25%	1,000,001-5,000,000
35%	5,000,001 and above
Tax on gross wage income is collected at the source of payments through withholding from wage, salary, dividend and interest income. For interest and dividend income a withholding tax of 10 percent is applied, which fully covers the tax obligation from these sources.
Resident physical persons who receive income from entrepreneurial activity file tax returns and make advance payments within the 15th day after the end of each quarter.
2. PROFIT TAX	The profit tax is paid by resident and non-resident enterprises. The tax code specifies a base tax rate and discount for enterprises operating outside the capital or in specific sectors. Regional tax concessions require physical production in the area.	Exemptions Charitable organizations, donations, gratuitous transfers, non-commercial membership fees. Profits of the national bank, income from international organizations, and from state authority and budgetary organizations. Concessions Taxes are half rate for organizations with 50% of employees from social organizations. Deductions Expenses connected with earning income. Certain types of bad and doubtful debt. Allocations to a reserve fund for insurance companies with exceptions. Expenses on scientific-research, experimental construction, and costs incurred by geological exploration, and expenses on intangible assets. Depreciation of capital stock with accelerated schedule for some items. Repair expenses and costs incurred for geological exploration. Carry over of losses exceeding income of a given year to the next year for up to 5 years.	Profits tax rate at 25%. Discounts on the tax rate 80% in cities outside Baku 40% in mountainous regions 60% in other districts 80% for tourism activities 40% for handicraft and woodwork craftsmanship
2. PROFIT TAX	Profits are defined as the difference between income and allowed deductions specified in the tax code. Tax payments are made quarterly within 15 days after end of each quarter and a final adjustment is made after the end-year income statement has been submitted at the end of the first quarter of the following calendar year. Quarterly tax advance payments are determined by using one of two methods: (i) by multiplying the volume of income times the ratio of last year’s profit tax over income, or (ii) by using ¼ parts of previous year’s paid profit tax.
3. VALUE ADDED TAX (VAT)	The VAT is implemented through a credit-invoice mechanism and applies to goods and services within the country as well as to imports.	The following activities or items are exempt from VAT. Property purchase in the process of privatization. Financial services including leasing. Supply of national and foreign currency. Imports of gold, foreign currency and similar items. Imports of capital investments. Services of state and other official authorities. Purchases or sales connected to mass media products, editing, publishing, printing, services related to funeral ceremonies. Activities of international organizations. Imports by the national bank. Transactions of fixed and moveable assets to the State Oil Fund Other imports can be exempted by appropriate executive authority such as agricultural products. Zero-rated items or activities. Goods and services of foreign official establishments and representatives. Activities related to humanitarian aid. Exports of goods and services. International transportation of cargo an passengers. Dispatch of gold and other valuables to ANB.	18% uniform
	VAT registration is required if the value of transactions for the previous 3 months exceeds 1250 times the minimum tax-exempted wages. This is equivalent to an annual turnover of $US 100,000 at end 2002 exchange rates.
	VAT applicable activities include brokerage fees and gratuitous transfer of goods and financial assistance.
4. EXCISE TAXES	All enterprises and physical persons producing or importing excisable goods are taxpayers. The tax code defines drinking alcohol, tobacco products and oil products as excisable goods.	Exemptions Imports of less than 3 liters of alcohol, three packs of cigarettes and fuel in car for personal use. Imports related to humanitarian aid. Goods in transit and temporary imports. Zero-rated items or activities. Export of excisable goods.	Tax rates are determined by the relevant executive authority body.
5. ROYALTY TAX	Tax based on utilization of underground mineral resources payable by resident and non-resident individuals and enterprises.	Royalty is not paid on oil or gas exports from the international consortium of oil producers (AIOC). Royalties on oil and gas production from the state owned oil company (SOCAR) are limited due the use of a negotiated tax target for SOCAR. Concession of 50% of base rate Enterprises and individuals producing mineral water in mountainous regions.	26% on value of crude oil 20% on value of natural gas Other minerals and materials: 3-10%
6. LAND TAX	Tax levied on land plots owned by resident and non resident physical and legal persons.	Exempt are Land in common use of residential areas. Land of state authority bodies and budgetary organizations and national bank. Lands of state forestry and water funds. State boundary land strips and land used for defense. Land tax reduced by 50% on non-taxable amount of monthly income, if owner exempt from income tax	Rates differ by region and type of land use.
7. PROPERTY TAX	Paid by resident and non resident physical persons and enterprises on the value of property owned including buildings and vehicles.	Exempt are Buildings of the state authority, national bank, and public organizations of invalids. Workshop premises of physical persons who are engaged in a list of activities such as making pottery, tin etc. Buildings with a value of less than 300 times the non-taxable amount of monthly income. Concessions For military service men, pensioners and people who receive income tax concessions the amount of property tax is reduced by 1.5 times the non-taxable amount of wages. Small scale entrepreneurial activity of physical persons. Deductions for enterprises for the property value of buildings used for environmental protection, civil defense, fire safety, pipelines, railways, roads, land irrigation, communication, vehicles trolley buses and trams, buildings for health, education, and sport and fixed asset depreciation. Property tax is reduced by 50% if exempt from income tax.	Property tax obligation: Buildings: 0.01% of the value of a building Water and air transportation: 0.02% times non-taxable monthly wages per 1 sm3 of engine; 1% of market price for motorless water and air facilities. Cars and trucks: 0.01 % (0.02% for trucks) of non-taxable monthly wages per 1 sm3 of engine
8. STATE ROAD TAX	Tax for use of roads levied on vehicles from foreign states entering the country.		Rates depend on type of vehicle, period of stay in country, and cargo of trucks.
9. SIMPLIFIED TAX	Taxpayers are enterprises not registered for VAT purposes due to low turnover and passenger and cargo transportation including taxis. The subject of taxation is volume of turnover during the reporting period.	Taxpayers of the simplified tax do not pay VAT, profit, property and land tax.	4% of gross turnover in Baku 2% of gross turnover in other areas 10% of gross turnover for passenger and cargo transportation
10. EXPORT TAX	Tax paid on revenue markup over domestic prices of crude oil and oil products exports. Tax is assessed on the difference between export value minus export costs and value at domestic wholesale prices.	Legally not part of the tax code. Re-introduced in 2003 in the annual budget law. Applies only to SOCAR.	20% of value difference

STATISTICAL APPENDIX

Table 1.

Azerbaijan: Gross Domestic Product by Sector of Origin, 1998-2002

Source: Azerbaijan State Statistics Committee.

^{^1/}Preliminary data.

Table 1.

Azerbaijan: Gross Domestic Product by Sector of Origin, 1998-2002

					1998	1999	2000	2001	2002 ^1/
					(In billions of manats)
Gross Domestic Product at market prices					17,203	18,875	23,591	26,578	29,602
	Taxes on goods and services				1,177	1,336	1,512	2,166	2,376
	Subsidies on goods and services				468	590	56	74	82
Gross Domestic Product at factor cost					16,494	18,129	22,135	24,486	27,308
		Industry			3,784	5,327	8,495	9,999	10,320
			Extraction		…	3,493	6,522	7,880	8,121
				of which: oil and gas extraction	…	3,477	6,511	7,875	8,111
			Processing		…	1,140	1,248	1,731	1,817
				of which: oil and gas processing	…	316	676	632	632
			Electricity, gas and water supply		…	694	725	387	383
		Agriculture			3,092	3,440	3,755	3,943	4,195
		Construction			2,229	2,053	1,540	1,554	3,185
		Transportation and communication			1,612	2,022	2,836	2,695	2,903
		Trade			1,011	1,336	1,575	1,966	2,354
		Social services			4,315	3,951	3,934	4,330	4,350

Source: Azerbaijan State Statistics Committee.

^{^1/}Preliminary data.

Table 1.

Azerbaijan: Gross Domestic Product by Sector of Origin, 1998-2002

					1998	1999	2000	2001	2002 ^1/
					(In billions of manats)
Gross Domestic Product at market prices					17,203	18,875	23,591	26,578	29,602
	Taxes on goods and services				1,177	1,336	1,512	2,166	2,376
	Subsidies on goods and services				468	590	56	74	82
Gross Domestic Product at factor cost					16,494	18,129	22,135	24,486	27,308
		Industry			3,784	5,327	8,495	9,999	10,320
			Extraction		…	3,493	6,522	7,880	8,121
				of which: oil and gas extraction	…	3,477	6,511	7,875	8,111
			Processing		…	1,140	1,248	1,731	1,817
				of which: oil and gas processing	…	316	676	632	632
			Electricity, gas and water supply		…	694	725	387	383
		Agriculture			3,092	3,440	3,755	3,943	4,195
		Construction			2,229	2,053	1,540	1,554	3,185
		Transportation and communication			1,612	2,022	2,836	2,695	2,903
		Trade			1,011	1,336	1,575	1,966	2,354
		Social services			4,315	3,951	3,934	4,330	4,350

Source: Azerbaijan State Statistics Committee.

^{^1/}Preliminary data.

Table 2.

Azerbaijan: Gross Domestic Product by Final Use, 1998-2002

Sources: Azerbaijan State Statistics Committee; and Fund staff estimates.

^{^1/}Preliminary data.

^{^2/}For 2002 includes investment of US$50 mln. for the government’s share in BTC, equivalent to 0.8 percent of GDP.

Table 2.

Azerbaijan: Gross Domestic Product by Final Use, 1998-2002

			1998	1999	2000	2001	2002 ^1/
			(In billions of manats)
Gross domestic product			17,203	18,875	23,591	26,578	29,602
	Final consumption		16,908	16,497	18,557	20,125	22,095
		Households	14,256	13,657	15,371	16,758	17,796
		Government	2,652	2,840	3,185	3,366	4,300
	Gross fixed capital formation		6,109	5,381	5,459	6,081	10,293
		Private	5,793	4,688	4,745	5,138	8,599
		Public ^2/	316	693	713	943	1,694
	Change in inventories		-369	-380	-581	-586	-592
	Resource gap		-5,476	-2,623	156	958	-2,195
		Exports of goods and nonfactor services	3,906	5,282	9,210	10,877	12,893
		Imports of goods and nonfactor services	9,381	7,905	9,054	9,918	15,087
	Statistical discrepancy		31	0	0	0	0
			(In percent of GDP)
Gross domestic product			100.0	100.0	100.0	100.0	100.0
	Final consumption		98.3	87.4	78.7	75.7	74.6
		Households	82.9	72.4	65.2	63.1	60.1
		Government	15.4	15.0	13.5	12.7	14.5
	Gross fixed capital formation		35.5	28.5	23.1	22.9	34.8
		Private	33.7	24.8	20.1	19.3	29.0
		Public	1.8	3.7	3.0	3.5	5.7
	Change in inventories		-2.1	-2.0	-2.5	-2.2	-2.0
	Net exports		-31.8	-13.9	0.7	3.6	-7.4
		Exports of goods and nonfactor services	22.7	28.0	39.0	40.9	43.6
		Imports of goods and nonfactor services	54.5	41.9	38.4	37.3	51.0
	Statistical discrepancy		0.2	0.0	0.0	0.0	0.0

Sources: Azerbaijan State Statistics Committee; and Fund staff estimates.

^{^1/}Preliminary data.

^{^2/}For 2002 includes investment of US$50 mln. for the government’s share in BTC, equivalent to 0.8 percent of GDP.

Table 2.

Azerbaijan: Gross Domestic Product by Final Use, 1998-2002

			1998	1999	2000	2001	2002 ^1/
			(In billions of manats)
Gross domestic product			17,203	18,875	23,591	26,578	29,602
	Final consumption		16,908	16,497	18,557	20,125	22,095
		Households	14,256	13,657	15,371	16,758	17,796
		Government	2,652	2,840	3,185	3,366	4,300
	Gross fixed capital formation		6,109	5,381	5,459	6,081	10,293
		Private	5,793	4,688	4,745	5,138	8,599
		Public ^2/	316	693	713	943	1,694
	Change in inventories		-369	-380	-581	-586	-592
	Resource gap		-5,476	-2,623	156	958	-2,195
		Exports of goods and nonfactor services	3,906	5,282	9,210	10,877	12,893
		Imports of goods and nonfactor services	9,381	7,905	9,054	9,918	15,087
	Statistical discrepancy		31	0	0	0	0
			(In percent of GDP)
Gross domestic product			100.0	100.0	100.0	100.0	100.0
	Final consumption		98.3	87.4	78.7	75.7	74.6
		Households	82.9	72.4	65.2	63.1	60.1
		Government	15.4	15.0	13.5	12.7	14.5
	Gross fixed capital formation		35.5	28.5	23.1	22.9	34.8
		Private	33.7	24.8	20.1	19.3	29.0
		Public	1.8	3.7	3.0	3.5	5.7
	Change in inventories		-2.1	-2.0	-2.5	-2.2	-2.0
	Net exports		-31.8	-13.9	0.7	3.6	-7.4
		Exports of goods and nonfactor services	22.7	28.0	39.0	40.9	43.6
		Imports of goods and nonfactor services	54.5	41.9	38.4	37.3	51.0
	Statistical discrepancy		0.2	0.0	0.0	0.0	0.0

Sources: Azerbaijan State Statistics Committee; and Fund staff estimates.

^{^1/}Preliminary data.

^{^2/}For 2002 includes investment of US$50 mln. for the government’s share in BTC, equivalent to 0.8 percent of GDP.

Table 3.

Azerbaijan: Income, Savings, and Net Financial Balances, 1998-2002

Sources: Azeri authorities; and Fund staff estimates.

^{^1/}Preliminary data.

^{^2/}Gross disposable national income minus total consumption.

^{^3/}GDP at market prices minus total consumption.

Table 3.

Azerbaijan: Income, Savings, and Net Financial Balances, 1998-2002

		1998	1999	2000	2001	2002 ^1/
		(In billions of manats)
GDP at market prices		17,203	18,875	23,591	26,578	29,602
Net factor income from abroad		141	191	-1,321	-1,547	-1,864
Gross national product		17,344	19,066	22,269	25,031	27,738
Unrequited transfers (net)		297	357	327	357	340
Gross disposable national income		17,641	19,423	22,596	25,387	28,078
Total consumption		16,908	16,497	18,557	20,125	22,095
	Private	14,256	13,657	15,371	16,758	17,796
	Consolidated government	2,652	2,840	3,185	3,366	4,300
Gross national savings ^2/		733	2,926	4,039	5,263	5,983
	Private	1,093	3,129	3,464	4,073	4,429
	Consolidated government	-360	-202	576	1,190	1,554
Gross domestic savings ^3/		295	2,378	5,034	6,453	7,506
Gross fixed investment		6,109	5,381	5,459	6,081	10,293
	Private sector	5,793	4,688	4,745	5,138	8,599
	Consolidated government	316	693	713	943	1,694
			(In percent of GDP)
GDP at market prices		100.0	100.0	100.0	100.0	100.0
Net factor income from abroad		0.8	1.0	-5.6	-5.8	-6.3
Gross national product		100.8	101.0	94.4	94.2	93.7
Unrequited transfers (net)		1.7	1.9	1.4	1.3	1.1
Gross disposable national income		102.5	102.9	95.8	95.5	94.9
Total consumption		98.3	87.4	78.7	75.7	74.6
	Private	82.9	72.4	65.2	63.1	60.1
	Consolidated government	15.4	15.0	13.5	12.7	14.5
Gross national savings		4.3	15.5	17.1	19.8	20.2
	Private	6.4	16.6	14.7	15.3	15.0
	Consolidated government	-2.1	-1.1	2.4	4.5	5.2
Gross domestic savings		1.7	12.6	21.3	24.3	25.4
Gross fixed investment		35.5	28.5	23.1	22.9	34.8
	Private sector	33.7	24.8	20.1	19.3	29.0
	Consolidated government	1.8	3.7	3.0	3.5	5.7

Sources: Azeri authorities; and Fund staff estimates.

^{^1/}Preliminary data.

^{^2/}Gross disposable national income minus total consumption.

^{^3/}GDP at market prices minus total consumption.

Table 3.

Azerbaijan: Income, Savings, and Net Financial Balances, 1998-2002

		1998	1999	2000	2001	2002 ^1/
		(In billions of manats)
GDP at market prices		17,203	18,875	23,591	26,578	29,602
Net factor income from abroad		141	191	-1,321	-1,547	-1,864
Gross national product		17,344	19,066	22,269	25,031	27,738
Unrequited transfers (net)		297	357	327	357	340
Gross disposable national income		17,641	19,423	22,596	25,387	28,078
Total consumption		16,908	16,497	18,557	20,125	22,095
	Private	14,256	13,657	15,371	16,758	17,796
	Consolidated government	2,652	2,840	3,185	3,366	4,300
Gross national savings ^2/		733	2,926	4,039	5,263	5,983
	Private	1,093	3,129	3,464	4,073	4,429
	Consolidated government	-360	-202	576	1,190	1,554
Gross domestic savings ^3/		295	2,378	5,034	6,453	7,506
Gross fixed investment		6,109	5,381	5,459	6,081	10,293
	Private sector	5,793	4,688	4,745	5,138	8,599
	Consolidated government	316	693	713	943	1,694
			(In percent of GDP)
GDP at market prices		100.0	100.0	100.0	100.0	100.0
Net factor income from abroad		0.8	1.0	-5.6	-5.8	-6.3
Gross national product		100.8	101.0	94.4	94.2	93.7
Unrequited transfers (net)		1.7	1.9	1.4	1.3	1.1
Gross disposable national income		102.5	102.9	95.8	95.5	94.9
Total consumption		98.3	87.4	78.7	75.7	74.6
	Private	82.9	72.4	65.2	63.1	60.1
	Consolidated government	15.4	15.0	13.5	12.7	14.5
Gross national savings		4.3	15.5	17.1	19.8	20.2
	Private	6.4	16.6	14.7	15.3	15.0
	Consolidated government	-2.1	-1.1	2.4	4.5	5.2
Gross domestic savings		1.7	12.6	21.3	24.3	25.4
Gross fixed investment		35.5	28.5	23.1	22.9	34.8
	Private sector	33.7	24.8	20.1	19.3	29.0
	Consolidated government	1.8	3.7	3.0	3.5	5.7

Sources: Azeri authorities; and Fund staff estimates.

^{^1/}Preliminary data.

^{^2/}Gross disposable national income minus total consumption.

^{^3/}GDP at market prices minus total consumption.

Table 4.

Azerbaijan: Crude Oil and Gas Production, 1981-2002

Sources: Azerbaijan State Statistics Committee.

Table 4.

Azerbaijan: Crude Oil and Gas Production, 1981-2002

	Offshore crude oil		Onshore crude oil	Total crude oil	Total gas
	Total	AIOC	Onshore crude oil	Total crude oil	Total gas
	(In millions of tons)		(In billions of m3)
1981	9.4	-	4.7	14.1	14.6
1982	8.2	-	4.7	12.9	14.9
1983	8.4	-	4.3	12.7	14.5
1984	8.4	-	4.1	12.5	14.4
1985	9.2	-	3.9	13.1	14.1
1986	9.4	-	3.9	13.3	13.6
1987	10.1	-	3.7	13.8	12.5
1988	10.3	-	3.4	13.7	11.8
1989	10.2	-	3.0	13.2	11.1
1990	9.9	-	2.6	12.5	9.9
1991	9.5	-	2.2	11.7	8.6
1992	9.1	-	2.0	11.1	7.9
1993	8.3	-	2.0	10.3	6.8
1994	7.8	-	1.8	9.6	6.4
1995	7.5	-	1.6	9.1	6.6
1996	7.5	-	1.6	9.1	6.3
1997	7.5	0.1	1.6	9.1	6.0
1998	9.8	2.4	1.6	11.4	5.6
1999	12.3	4.8	1.5	13.8	6.0
2000	12.5	5.0	1.5	14.0	6.0
2001	13.3	5.9	1.6	14.9	5.7
2002	13.8	6.4	1.5	15.3	5.5

Sources: Azerbaijan State Statistics Committee.

Table 4.

Azerbaijan: Crude Oil and Gas Production, 1981-2002

	Offshore crude oil		Onshore crude oil	Total crude oil	Total gas
	Total	AIOC	Onshore crude oil	Total crude oil	Total gas
	(In millions of tons)		(In billions of m3)
1981	9.4	-	4.7	14.1	14.6
1982	8.2	-	4.7	12.9	14.9
1983	8.4	-	4.3	12.7	14.5
1984	8.4	-	4.1	12.5	14.4
1985	9.2	-	3.9	13.1	14.1
1986	9.4	-	3.9	13.3	13.6
1987	10.1	-	3.7	13.8	12.5
1988	10.3	-	3.4	13.7	11.8
1989	10.2	-	3.0	13.2	11.1
1990	9.9	-	2.6	12.5	9.9
1991	9.5	-	2.2	11.7	8.6
1992	9.1	-	2.0	11.1	7.9
1993	8.3	-	2.0	10.3	6.8
1994	7.8	-	1.8	9.6	6.4
1995	7.5	-	1.6	9.1	6.6
1996	7.5	-	1.6	9.1	6.3
1997	7.5	0.1	1.6	9.1	6.0
1998	9.8	2.4	1.6	11.4	5.6
1999	12.3	4.8	1.5	13.8	6.0
2000	12.5	5.0	1.5	14.0	6.0
2001	13.3	5.9	1.6	14.9	5.7
2002	13.8	6.4	1.5	15.3	5.5

Sources: Azerbaijan State Statistics Committee.

Table 5.

Azerbaijan: Production Indicators, 1998-2002

Source: Azerbaijan State Statistics Committee.

Table 5.

Azerbaijan: Production Indicators, 1998-2002

			1998	1999	2000	2001	2002
			(Index of real output; 1992 = 100)
Total industry			45.5	47.1	50.3	52.9	54.8
	Energy		78.3	82.4	83.9	85.2	87.1
		Electricity	74.7	75.8	78.2	79.7	78.5
		Oil and gas	80.1	85.7	90.2	91.6	93.7
	Metallurgy		4.4	7.1	17.8	7.4	14.5
	Machine building		14.2	6.3	12.3	14.7	12.0
	Chemical and petro-chemical		29.6	32.2	39.7	22.9	29.8
	Construction materials		12.1	9.5	11.4	21.0	29.8
	Light industry		15.6	9.3	11.5	8.9	9.7
	Textiles		15.3	10.0	12.3	9.7	12.2
	Agro processing		15.3	15.9	16.2	18.4	18.3
	Agriculture		70.5	75.4	84.5	93.9	99.9
	Grains		71.1	82.1	115.2	150.8	164.1
	Cotton		33.6	28.8	27.2	24.9	23.8
			(Real percentage changes)
Total industry			2.2	3.5	6.8	5.2	3.6
	Energy		7.0	5.2	1.8	1.5	2.2
		Electricity	6.0	1.5	3.2	1.9	-1.5
		Oil and gas	7.5	7.0	5.3	1.6	2.3
	Metallurgy		-54.6	61.4	150.7	-58.4	95.9
	Machine building		-30.4	-55.6	95.2	19.5	-18.4
	Chemical and petro-chemical		-11.4	8.8	23.3	-42.3	30.1
	Construction materials		-22.4	-21.5	20.0	84.2	41.9
	Light industry		-41.8	-40.4	23.7	-22.6	9.0
	Textiles		-44.2	-34.6	23.0	-21.1	25.8
	Agro processing		-2.5	3.9	1.9	13.6	-0.5
Agriculture			6.2	7.0	12.1	11.1	6.4
	Grains		-15.7	15.5	40.3	30.9	8.8
	Cotton		-9.3	-14.3	-5.6	-8.5	-4.4

Source: Azerbaijan State Statistics Committee.

Table 5.

Azerbaijan: Production Indicators, 1998-2002

			1998	1999	2000	2001	2002
			(Index of real output; 1992 = 100)
Total industry			45.5	47.1	50.3	52.9	54.8
	Energy		78.3	82.4	83.9	85.2	87.1
		Electricity	74.7	75.8	78.2	79.7	78.5
		Oil and gas	80.1	85.7	90.2	91.6	93.7
	Metallurgy		4.4	7.1	17.8	7.4	14.5
	Machine building		14.2	6.3	12.3	14.7	12.0
	Chemical and petro-chemical		29.6	32.2	39.7	22.9	29.8
	Construction materials		12.1	9.5	11.4	21.0	29.8
	Light industry		15.6	9.3	11.5	8.9	9.7
	Textiles		15.3	10.0	12.3	9.7	12.2
	Agro processing		15.3	15.9	16.2	18.4	18.3
	Agriculture		70.5	75.4	84.5	93.9	99.9
	Grains		71.1	82.1	115.2	150.8	164.1
	Cotton		33.6	28.8	27.2	24.9	23.8
			(Real percentage changes)
Total industry			2.2	3.5	6.8	5.2	3.6
	Energy		7.0	5.2	1.8	1.5	2.2
		Electricity	6.0	1.5	3.2	1.9	-1.5
		Oil and gas	7.5	7.0	5.3	1.6	2.3
	Metallurgy		-54.6	61.4	150.7	-58.4	95.9
	Machine building		-30.4	-55.6	95.2	19.5	-18.4
	Chemical and petro-chemical		-11.4	8.8	23.3	-42.3	30.1
	Construction materials		-22.4	-21.5	20.0	84.2	41.9
	Light industry		-41.8	-40.4	23.7	-22.6	9.0
	Textiles		-44.2	-34.6	23.0	-21.1	25.8
	Agro processing		-2.5	3.9	1.9	13.6	-0.5
Agriculture			6.2	7.0	12.1	11.1	6.4
	Grains		-15.7	15.5	40.3	30.9	8.8
	Cotton		-9.3	-14.3	-5.6	-8.5	-4.4

Source: Azerbaijan State Statistics Committee.

Table 6.

Azerbaijan: Average Monthly Wages by Sector, 1998-2002

Sources: Azerbaijan State Statistics Committee; and Fund staff estimates.

^{^1/}ln 1999, State Statistics Committee introduced a new economic classification. As a result, sectoral changes between 1998 and 1999 should be treated with caution.

^{^2/}Starting from 1999 salaries for transport and communications sectors are grouped into one type of activity and a single figure is shown for both sectors.

^{^3/}Data are not available.

Table 6.

Azerbaijan: Average Monthly Wages by Sector, 1998-2002

		1998	1999 ^1/	2000	2001	2002
		(Annual average, in manats)
National economy		168,419	184,368	221,606	259,991	315,219
	Industry	277,050	365,575	436,237	499,763	554,398
	Agriculture	43,957	65,122	69,081	78,936	88,729
	Transportation ^2/	291,028	249,870	292,421	330,281	365,414
	Communication ^2/	263,576	-	-	-	-
	Construction	441,595	428,473	416,663	436,924	548,286
	Trade	75,789	117,943	119,284	149,648	175,115
	Hotel industry	120,925	343,351	314,858	419,447	427,140
	Health and social services	70,062	71,098	73,395	80,630	89,949
	Education	132,209	141,532	156,065	165,225	168,961
	Culture ^3/	76,016	-	-	-	-
	Banking and insurance	332,796	590,961	632,626	723,606	1,019,767
	Government administration	165,051	181,746	194,528	223,421	260,356
		(Annual percentage changes)
National economy		18.9	9.5	20.2	17.3	21.2
	Industry	19.8	32.0	19.3	14.6	10.9
	Agriculture	-11.3	48.1	6.1	14.3	12.4
	Transportation ^2/	28.3	-14.1	17.0	12.9	10.6
	Communication ^2/	27.5	-	-	-	-
	Construction	47.3	-3.0	-2.8	4.9	25.5
	Trade	12.4	55.6	1.1	25.5	17.0
	Hotel industry	6.4	183.9	-8.3	33.2	1.8
	Health and social services	3.3	1.5	3.2	9.9	11.6
	Education	10.3	7.1	10.3	5.9	2.3
	Culture ^3/	10.9	-	-	-	-
	Banking and insurance	39.4	77.6	7.1	14.4	40.9
	Government administration	50.8	10.1	7.0	14.9	16.5
Memorandum items:
	Average annual wage (U.S. dollars)	43.5	44.7	49.5	55.8	65.2
	Agriculture/(Banking and insurance) ratio	0.13	0.11	0.11	0.11	0.09

Sources: Azerbaijan State Statistics Committee; and Fund staff estimates.

^{^1/}ln 1999, State Statistics Committee introduced a new economic classification. As a result, sectoral changes between 1998 and 1999 should be treated with caution.

^{^2/}Starting from 1999 salaries for transport and communications sectors are grouped into one type of activity and a single figure is shown for both sectors.

^{^3/}Data are not available.

Table 6.

Azerbaijan: Average Monthly Wages by Sector, 1998-2002

		1998	1999 ^1/	2000	2001	2002
		(Annual average, in manats)
National economy		168,419	184,368	221,606	259,991	315,219
	Industry	277,050	365,575	436,237	499,763	554,398
	Agriculture	43,957	65,122	69,081	78,936	88,729
	Transportation ^2/	291,028	249,870	292,421	330,281	365,414
	Communication ^2/	263,576	-	-	-	-
	Construction	441,595	428,473	416,663	436,924	548,286
	Trade	75,789	117,943	119,284	149,648	175,115
	Hotel industry	120,925	343,351	314,858	419,447	427,140
	Health and social services	70,062	71,098	73,395	80,630	89,949
	Education	132,209	141,532	156,065	165,225	168,961
	Culture ^3/	76,016	-	-	-	-
	Banking and insurance	332,796	590,961	632,626	723,606	1,019,767
	Government administration	165,051	181,746	194,528	223,421	260,356
		(Annual percentage changes)
National economy		18.9	9.5	20.2	17.3	21.2
	Industry	19.8	32.0	19.3	14.6	10.9
	Agriculture	-11.3	48.1	6.1	14.3	12.4
	Transportation ^2/	28.3	-14.1	17.0	12.9	10.6
	Communication ^2/	27.5	-	-	-	-
	Construction	47.3	-3.0	-2.8	4.9	25.5
	Trade	12.4	55.6	1.1	25.5	17.0
	Hotel industry	6.4	183.9	-8.3	33.2	1.8
	Health and social services	3.3	1.5	3.2	9.9	11.6
	Education	10.3	7.1	10.3	5.9	2.3
	Culture ^3/	10.9	-	-	-	-
	Banking and insurance	39.4	77.6	7.1	14.4	40.9
	Government administration	50.8	10.1	7.0	14.9	16.5
Memorandum items:
	Average annual wage (U.S. dollars)	43.5	44.7	49.5	55.8	65.2
	Agriculture/(Banking and insurance) ratio	0.13	0.11	0.11	0.11	0.09

Sources: Azerbaijan State Statistics Committee; and Fund staff estimates.

^{^1/}ln 1999, State Statistics Committee introduced a new economic classification. As a result, sectoral changes between 1998 and 1999 should be treated with caution.

^{^2/}Starting from 1999 salaries for transport and communications sectors are grouped into one type of activity and a single figure is shown for both sectors.

^{^3/}Data are not available.

Table 7.

Azerbaijan: Labor Market Indicators, 1998-2002

Sources: Azerbaijan State Statistics Committee; and Fund staff estimates.

^{^1/}In 1999 the State Statistics Committee introduced a new economic classification. As a result, sectoral changes between 1998 and 1999 should be treated with caution.

Table 7.

Azerbaijan: Labor Market Indicators, 1998-2002

		1998	1999 ^1/	2000	2001	2002
		(In thousands of persons)
Population		7,949	8,016	8,081	8,141	8,203
Working age population		4,513	4,615	4,730	4,858	4,895
Labor force		3,744	3,748	3,748	3,763	3,778
Total employment		3,702	3,707	3,705	3,715	3,727
	Industry	251	259	250	247	252
	Government	656	728	745	682	759
	Agriculture	1,140	1,566	1,517	1,482	1,495
	Other	1,655	1,154	1,193	1,304	1,221
Unemployment		42	41	43	48	51
	Unemployment rate (in percent of labor force)	1.1	1.1	1.1	1.3	1.3
Registered unemployed		42	41	43	48	51
Pensioners		1,177	1,202	1,219	1,245	1,276
		(Percentage changes)
Population		0.9	0.8	0.8	0.7	0.8
Working age population		3.6	2.3	2.5	2.7	0.8
Labor force		0.3	0.1	0.0	0.4	0.4
Total employment		0.2	0.1	-0.1	0.3	0.3

Sources: Azerbaijan State Statistics Committee; and Fund staff estimates.

^{^1/}In 1999 the State Statistics Committee introduced a new economic classification. As a result, sectoral changes between 1998 and 1999 should be treated with caution.

Table 7.

Azerbaijan: Labor Market Indicators, 1998-2002

		1998	1999 ^1/	2000	2001	2002
		(In thousands of persons)
Population		7,949	8,016	8,081	8,141	8,203
Working age population		4,513	4,615	4,730	4,858	4,895
Labor force		3,744	3,748	3,748	3,763	3,778
Total employment		3,702	3,707	3,705	3,715	3,727
	Industry	251	259	250	247	252
	Government	656	728	745	682	759
	Agriculture	1,140	1,566	1,517	1,482	1,495
	Other	1,655	1,154	1,193	1,304	1,221
Unemployment		42	41	43	48	51
	Unemployment rate (in percent of labor force)	1.1	1.1	1.1	1.3	1.3
Registered unemployed		42	41	43	48	51
Pensioners		1,177	1,202	1,219	1,245	1,276
		(Percentage changes)
Population		0.9	0.8	0.8	0.7	0.8
Working age population		3.6	2.3	2.5	2.7	0.8
Labor force		0.3	0.1	0.0	0.4	0.4
Total employment		0.2	0.1	-0.1	0.3	0.3

Sources: Azerbaijan State Statistics Committee; and Fund staff estimates.

^{^1/}In 1999 the State Statistics Committee introduced a new economic classification. As a result, sectoral changes between 1998 and 1999 should be treated with caution.

Table 8.

Azerbaijan: Consumer Price Index, 1999-2002

Source: Azerbaijan State Statistics Committee.

Table 8.

Azerbaijan: Consumer Price Index, 1999-2002

		Percentage changes
				Quarterly		Annual
		Index Dec 1994=100	In the month	End of Period	Average	End of Period	Average
1999	January	181.9	-0.5			-8.7	-1.4
	February	181.3	-0.4			-9.4	-2.2
	March	181.3	0.0	-0.8	-4.9	-10.5	-3.1
	April	181.6	0.2			-10.7	-3.9
	May	181.3	-0.2			-9.8	-4.7
	June	179.8	-0.8	-0.8	-0.3	-9.6	-5.5
	July	178.3	-0.8			-9.4	-6.3
	August	178.4	0.0			-9.7	-7.3
	September	180.3	1.1	0.3	-1.0	-9.0	-8.1
	October	180.8	0.3			-7.5	-8.7
	November	181.2	0.2			-6.8	-9.1
	December	181.9	0.4	0.9	1.3	-0.5	-8.5
2000	January	183.3	0.7			0.7	-7.8
	February	185.2	1.0			2.2	-6.9
	March	185.3	0.1	1.8	1.8	2.2	-5.9
	April	185.3	0.0			2.0	-4.8
	May	184.4	-0.5			1.7	-3.8
	June	182.9	-0.8	-1.3	-0.2	1.7	-2.9
	July	181.9	-0.5			2.0	-1.9
	August	181.6	-0.2			1.8	-0.9
	September	182.9	0.7	0.0	-1.1	1.4	0.0
	October	183.9	0.6			1.7	0.8
	November	184.8	0.4			2.0	1.6
	December	186.0	0.6	1.7	1.5	2.2	1.8
2001	January	186.6	0.3			1.8	1.9
	February	187.6	0.6			1.3	1.8
	March	188.2	0.3	1.2	1.4	1.6	1.8
	April	188.5	0.2			1.7	1.7
	May	187.5	-0.5			1.7	1.7
	June	186.8	-0.4	-0.7	0.1	2.2	1.8
	July	185.3	-0.8			1.8	1.8
	August	184.3	-0.5			1.5	1.7
	September	185.2	0.5	-0.9	-1.4	1.2	1.7
	October	186.2	0.6			1.2	1.7
	November	186.8	0.3			1.1	1.6
	December	188.5	0.9	1.8	1.2	1.3	1.5
2002	January	189.7	0.6			1.7	1.5
	February	190.5	0.4			1.5	1.6
	March	191.3	0.4	1.5	1.8	1.6	1.6
	April	193.1	0.9			2.4	1.6
	May	194.0	0.5			3.5	1.8
	June	192.0	-1.0	0.4	1.3	2.8	1.8
	July	191.2	-0.4			3.2	1.9
	August	190.2	-0.6			3.2	2.1
	September	191.0	0.5	-0.5	-1.2	3.2	2.2
	October	192.2	0.6			3.2	2.4
	November	193.6	0.7			3.6	2.6
	December	194.8	0.6	2.0	1.4	3.3	2.8

Source: Azerbaijan State Statistics Committee.

Table 8.

Azerbaijan: Consumer Price Index, 1999-2002

		Percentage changes
				Quarterly		Annual
		Index Dec 1994=100	In the month	End of Period	Average	End of Period	Average
1999	January	181.9	-0.5			-8.7	-1.4
	February	181.3	-0.4			-9.4	-2.2
	March	181.3	0.0	-0.8	-4.9	-10.5	-3.1
	April	181.6	0.2			-10.7	-3.9
	May	181.3	-0.2			-9.8	-4.7
	June	179.8	-0.8	-0.8	-0.3	-9.6	-5.5
	July	178.3	-0.8			-9.4	-6.3
	August	178.4	0.0			-9.7	-7.3
	September	180.3	1.1	0.3	-1.0	-9.0	-8.1
	October	180.8	0.3			-7.5	-8.7
	November	181.2	0.2			-6.8	-9.1
	December	181.9	0.4	0.9	1.3	-0.5	-8.5
2000	January	183.3	0.7			0.7	-7.8
	February	185.2	1.0			2.2	-6.9
	March	185.3	0.1	1.8	1.8	2.2	-5.9
	April	185.3	0.0			2.0	-4.8
	May	184.4	-0.5			1.7	-3.8
	June	182.9	-0.8	-1.3	-0.2	1.7	-2.9
	July	181.9	-0.5			2.0	-1.9
	August	181.6	-0.2			1.8	-0.9
	September	182.9	0.7	0.0	-1.1	1.4	0.0
	October	183.9	0.6			1.7	0.8
	November	184.8	0.4			2.0	1.6
	December	186.0	0.6	1.7	1.5	2.2	1.8
2001	January	186.6	0.3			1.8	1.9
	February	187.6	0.6			1.3	1.8
	March	188.2	0.3	1.2	1.4	1.6	1.8
	April	188.5	0.2			1.7	1.7
	May	187.5	-0.5			1.7	1.7
	June	186.8	-0.4	-0.7	0.1	2.2	1.8
	July	185.3	-0.8			1.8	1.8
	August	184.3	-0.5			1.5	1.7
	September	185.2	0.5	-0.9	-1.4	1.2	1.7
	October	186.2	0.6			1.2	1.7
	November	186.8	0.3			1.1	1.6
	December	188.5	0.9	1.8	1.2	1.3	1.5
2002	January	189.7	0.6			1.7	1.5
	February	190.5	0.4			1.5	1.6
	March	191.3	0.4	1.5	1.8	1.6	1.6
	April	193.1	0.9			2.4	1.6
	May	194.0	0.5			3.5	1.8
	June	192.0	-1.0	0.4	1.3	2.8	1.8
	July	191.2	-0.4			3.2	1.9
	August	190.2	-0.6			3.2	2.1
	September	191.0	0.5	-0.5	-1.2	3.2	2.2
	October	192.2	0.6			3.2	2.4
	November	193.6	0.7			3.6	2.6
	December	194.8	0.6	2.0	1.4	3.3	2.8

Source: Azerbaijan State Statistics Committee.

Table 9.

Azerbaijan: Breakdown of Consumer Price Index, 1999-2002

Source: Azerbaijan State Statistics Committee.

Table 9.

Azerbaijan: Breakdown of Consumer Price Index, 1999-2002

		Total		Food items		Non-food items		Non-Food goods		Services
		Percentage change	Index Dec 94=100	Percentage change	Index Dec 94=100	Percentage change	Index Dec 94=100	Percentage change	Index Dec 94=100	Percentage change	Index Dec 94=100
1999	January	-0.5	181.9	-0.6	171.5	-0.1	228.1	-0.1	179.3	0.0	392.0
	February	-0.4	181.3	-0.4	170.7	-0.3	227.5	-0.4	178.6	0.0	391.9
	March	0.0	181.3	-0.5	169.8	0.9	229.6	-0.1	178.4	2.4	401.2
	April	0.2	181.6	0.3	170.4	-0.1	229.3	-0.2	178.1	0.0	401.2
	May	-0.2	181.3	-0.3	169.9	0.0	229.3	0.0	178.1	0.0	401.2
	June	-0.8	179.8	-1.3	167.7	0.0	229.4	0.0	178.1	0.0	401.2
	July	-0.8	178.3	-1.3	165.5	0.0	229.4	0.0	178.2	0.0	401.2
	August	0.0	178.4	0.1	165.6	0.0	229.4	0.0	178.2	0.0	401.2
	September	1.1	180.3	1.7	168.5	0.0	229.3	0.0	178.1	0.0	401.1
	October	0.3	180.8	-0.4	167.9	1.4	232.5	0.7	179.4	2.2	410.0
	November	0.2	181.2	0.0	167.9	0.6	233.9	0.0	179.4	1.5	416.0
	December	0.4	181.9	0.7	169.0	0.0	233.8	0.0	179.4	0.0	416.0
2000	January	0.7	183.3	0.4	169.7	1.2	236.6	2.0	182.9	0.2	416.7
	February	1.0	185.2	1.7	172.7	-0.2	236.3	0.1	183.0	-0.5	414.6
	March	0.1	185.3	1.1	174.7	-1.8	232.0	-0.5	182.1	-3.6	399.7
	April	0.0	185.3	0.2	175.0	-0.3	231.4	-0.2	181.7	-0.4	397.9
	May	-0.5	184.4	-0.7	173.8	-0.1	231.1	-0.1	181.4	-0.1	397.6
	June	-0.8	182.9	-1.3	171.5	0.0	231.0	0.0	181.3	0.0	397.6
	July	-0.5	181.9	-0.8	170.2	0.0	230.9	-0.1	181.2	0.0	397.5
	August	-0.2	181.6	-0.3	169.7	0.0	230.9	0.0	181.2	0.0	397.5
	September	0.7	182.9	1.1	171.6	0.1	231.1	0.1	181.5	0.0	397.5
	October	0.6	183.9	0.8	172.9	0.3	231.7	0.4	182.3	0.0	397.5
	November	0.4	184.8	0.7	174.0	0.0	231.8	0.1	182.4	0.0	397.5
	December	0.6	186.0	1.0	175.8	0.0	231.8	0.0	182.4	0.0	397.5
2001	January	0.3	186.6	0.6	176.9	-0.2	231.2	-0.4	181.6	0.0	397.6
	February	0.6	187.6	1.0	178.7	-0.1	231.0	0.0	181.7	-0.3	396.5
	March	0.3	188.2	0.5	179.5	0.0	230.9	0.0	181.7	-0.1	396.2
	April	0.2	188.5	0.4	180.3	-0.2	230.4	-0.4	181.0	0.0	396.3
	May	-0.5	187.5	-0.9	178.7	0.1	230.6	0.2	181.3	0.0	396.3
	June	-0.4	186.8	-0.5	177.7	-0.1	230.4	0.0	181.3	-0.2	395.3
	July	-0.8	185.3	-1.4	175.2	0.1	230.7	0.2	181.6	0.0	395.3
	August	-0.5	184.3	-0.7	174.0	-0.2	230.1	-0.4	180.9	0.0	395.3
	September	0.5	185.2	0.5	174.8	0.4	231.1	0.7	182.3	0.0	395.3
	October	0.6	186.2	0.5	175.7	0.7	232.6	1.1	184.3	0.0	395.2
	November	0.3	186.8	0.4	176.5	0.1	232.9	0.2	184.7	0.0	395.2
	December	0.9	188.5	1.4	179.0	0.0	233.0	0.0	184.8	0.0	395.2
2002	January	0.6	189.7	0.8	180.5	0.3	233.7	0.5	185.8	0.0	395.3
	February	0.4	190.5	0.7	181.7	0.0	233.8	0.0	1S5.S	0.0	395.3
	March	0.4	191.3	0.6	182.9	0.0	233.8	0.0	185.9	-0.1	394.9
	April	0.9	193.1	1.4	185.5	0.1	234.1	0.0	186.0	0.3	395.9
	May	0.5	194.0	0.7	186.9	0.1	234.2	0.1	186.2	-0.1	395.7
	June	-1.0	192.0	-1.5	184.0	-0.1	233.9	-0.1	185.9	-0.1	395.4
	July	-0.4	191.2	-0.6	182.9	-0.1	233.8	-0.1	185.8	0.0	395.3
	August	-0.6	190.2	-0.8	181.3	-0.1	233.6	0.0	185.7	-0.1	394.9
	September	0.5	191.0	0.5	182.3	0.3	234.3	0.5	186.6	0.0	394.9
	October	0.6	192.2	0.9	183.9	0.1	234.6	0.2	187.0	0.0	394.9
	November	0.7	193.6	1.0	185.8	0.3	235.3	0.5	188.0	0.0	394.8
	December	0.6	194.8	0.9	187.5	0.0	235.3	0.0	188.0	0.0	394.8

Source: Azerbaijan State Statistics Committee.

Table 9.

Azerbaijan: Breakdown of Consumer Price Index, 1999-2002

		Total		Food items		Non-food items		Non-Food goods		Services
		Percentage change	Index Dec 94=100	Percentage change	Index Dec 94=100	Percentage change	Index Dec 94=100	Percentage change	Index Dec 94=100	Percentage change	Index Dec 94=100
1999	January	-0.5	181.9	-0.6	171.5	-0.1	228.1	-0.1	179.3	0.0	392.0
	February	-0.4	181.3	-0.4	170.7	-0.3	227.5	-0.4	178.6	0.0	391.9
	March	0.0	181.3	-0.5	169.8	0.9	229.6	-0.1	178.4	2.4	401.2
	April	0.2	181.6	0.3	170.4	-0.1	229.3	-0.2	178.1	0.0	401.2
	May	-0.2	181.3	-0.3	169.9	0.0	229.3	0.0	178.1	0.0	401.2
	June	-0.8	179.8	-1.3	167.7	0.0	229.4	0.0	178.1	0.0	401.2
	July	-0.8	178.3	-1.3	165.5	0.0	229.4	0.0	178.2	0.0	401.2
	August	0.0	178.4	0.1	165.6	0.0	229.4	0.0	178.2	0.0	401.2
	September	1.1	180.3	1.7	168.5	0.0	229.3	0.0	178.1	0.0	401.1
	October	0.3	180.8	-0.4	167.9	1.4	232.5	0.7	179.4	2.2	410.0
	November	0.2	181.2	0.0	167.9	0.6	233.9	0.0	179.4	1.5	416.0
	December	0.4	181.9	0.7	169.0	0.0	233.8	0.0	179.4	0.0	416.0
2000	January	0.7	183.3	0.4	169.7	1.2	236.6	2.0	182.9	0.2	416.7
	February	1.0	185.2	1.7	172.7	-0.2	236.3	0.1	183.0	-0.5	414.6
	March	0.1	185.3	1.1	174.7	-1.8	232.0	-0.5	182.1	-3.6	399.7
	April	0.0	185.3	0.2	175.0	-0.3	231.4	-0.2	181.7	-0.4	397.9
	May	-0.5	184.4	-0.7	173.8	-0.1	231.1	-0.1	181.4	-0.1	397.6
	June	-0.8	182.9	-1.3	171.5	0.0	231.0	0.0	181.3	0.0	397.6
	July	-0.5	181.9	-0.8	170.2	0.0	230.9	-0.1	181.2	0.0	397.5
	August	-0.2	181.6	-0.3	169.7	0.0	230.9	0.0	181.2	0.0	397.5
	September	0.7	182.9	1.1	171.6	0.1	231.1	0.1	181.5	0.0	397.5
	October	0.6	183.9	0.8	172.9	0.3	231.7	0.4	182.3	0.0	397.5
	November	0.4	184.8	0.7	174.0	0.0	231.8	0.1	182.4	0.0	397.5
	December	0.6	186.0	1.0	175.8	0.0	231.8	0.0	182.4	0.0	397.5
2001	January	0.3	186.6	0.6	176.9	-0.2	231.2	-0.4	181.6	0.0	397.6
	February	0.6	187.6	1.0	178.7	-0.1	231.0	0.0	181.7	-0.3	396.5
	March	0.3	188.2	0.5	179.5	0.0	230.9	0.0	181.7	-0.1	396.2
	April	0.2	188.5	0.4	180.3	-0.2	230.4	-0.4	181.0	0.0	396.3
	May	-0.5	187.5	-0.9	178.7	0.1	230.6	0.2	181.3	0.0	396.3
	June	-0.4	186.8	-0.5	177.7	-0.1	230.4	0.0	181.3	-0.2	395.3
	July	-0.8	185.3	-1.4	175.2	0.1	230.7	0.2	181.6	0.0	395.3
	August	-0.5	184.3	-0.7	174.0	-0.2	230.1	-0.4	180.9	0.0	395.3
	September	0.5	185.2	0.5	174.8	0.4	231.1	0.7	182.3	0.0	395.3
	October	0.6	186.2	0.5	175.7	0.7	232.6	1.1	184.3	0.0	395.2
	November	0.3	186.8	0.4	176.5	0.1	232.9	0.2	184.7	0.0	395.2
	December	0.9	188.5	1.4	179.0	0.0	233.0	0.0	184.8	0.0	395.2
2002	January	0.6	189.7	0.8	180.5	0.3	233.7	0.5	185.8	0.0	395.3
	February	0.4	190.5	0.7	181.7	0.0	233.8	0.0	1S5.S	0.0	395.3
	March	0.4	191.3	0.6	182.9	0.0	233.8	0.0	185.9	-0.1	394.9
	April	0.9	193.1	1.4	185.5	0.1	234.1	0.0	186.0	0.3	395.9
	May	0.5	194.0	0.7	186.9	0.1	234.2	0.1	186.2	-0.1	395.7
	June	-1.0	192.0	-1.5	184.0	-0.1	233.9	-0.1	185.9	-0.1	395.4
	July	-0.4	191.2	-0.6	182.9	-0.1	233.8	-0.1	185.8	0.0	395.3
	August	-0.6	190.2	-0.8	181.3	-0.1	233.6	0.0	185.7	-0.1	394.9
	September	0.5	191.0	0.5	182.3	0.3	234.3	0.5	186.6	0.0	394.9
	October	0.6	192.2	0.9	183.9	0.1	234.6	0.2	187.0	0.0	394.9
	November	0.7	193.6	1.0	185.8	0.3	235.3	0.5	188.0	0.0	394.8
	December	0.6	194.8	0.9	187.5	0.0	235.3	0.0	188.0	0.0	394.8

Source: Azerbaijan State Statistics Committee.

Table 10.

Azerbaijan: Prices of Electricity, 1998-2002

(In manat per kilowatt-hour)

Source: Ministry of Economic Development.

Table 10.

Azerbaijan: Prices of Electricity, 1998-2002

(In manat per kilowatt-hour)

	1998	1999	2000	2001	2002
Population	96	96	96	96	96
Industry and construction	206	192	174	130	130
Budgetary organizations	…	192	174	130	130
Apsheron Regional Water Company	158	158	157	130	130
Agriculture	174	168	162	130	130
Electrified transport	…	220	178	130	130
Non industrial consumption	265	318	238	130	130
Trade and services	408	408	282	250	250

Source: Ministry of Economic Development.

Table 10.

Azerbaijan: Prices of Electricity, 1998-2002

(In manat per kilowatt-hour)

	1998	1999	2000	2001	2002
Population	96	96	96	96	96
Industry and construction	206	192	174	130	130
Budgetary organizations	…	192	174	130	130
Apsheron Regional Water Company	158	158	157	130	130
Agriculture	174	168	162	130	130
Electrified transport	…	220	178	130	130
Non industrial consumption	265	318	238	130	130
Trade and services	408	408	282	250	250

Source: Ministry of Economic Development.

Table 11.

Azerbaijan: Prices of Gas, 1998-2002

(In manat per thousand cubic meters)

Source: Ministry of Economic Development.

Table 11.

Azerbaijan: Prices of Gas, 1998-2002

(In manat per thousand cubic meters)

	1998	1999	2000	2001	2002
Population	35,560	35,560	35,560	35,560	35,560
Communal	108,103	108,103	108,103	106,301	106,301
Industry	240,000	240,000	240,000	236,000	236,000
Azerenergy	198,000	198,000	198,000	194,700	194,700

Source: Ministry of Economic Development.

Table 11.

Azerbaijan: Prices of Gas, 1998-2002

(In manat per thousand cubic meters)

	1998	1999	2000	2001	2002
Population	35,560	35,560	35,560	35,560	35,560
Communal	108,103	108,103	108,103	106,301	106,301
Industry	240,000	240,000	240,000	236,000	236,000
Azerenergy	198,000	198,000	198,000	194,700	194,700

Source: Ministry of Economic Development.

Table 12.

Azerbaijan: Consolidated Government Operations, 1998-2002

(In billions of manats)

Sources: Ministry of Finance, State Oil Fund, Social Protection Fund; and Fund staff estimates.

Table 12.

Azerbaijan: Consolidated Government Operations, 1998-2002

(In billions of manats)

						1998	1999	2000	2001	2002
Total revenue and grants						3,370	3,487	5,006	5,714	8,276
	Total revenue					3,358	3,425	4,895	5,686	8,219
		Tax revenue				2,396	2,688	3,414	3,891	4,575
			Income lax			749	816	1,105	1,062	1,287
				Individual income tax		408	448	476	474	550
				Enterprise profits tax		340	368	629	538	737
			Social security contributions			437	458	563	565	641
			Value added tax (VAT)			719	791	957	1,266	1,674
			Excise taxes			95	114	112	555	433
			Taxes on international trade			293	318	494	300	376
			Other taxes			105	192	183	143	164
		Nontax revenue				961	738	1,481	1,795	2,041
			Of which: Oil Fund revenues			0	0	669	1,001	1,153
			Of which, extra-budgetary			615	230	202	207	310
			Tax credits for SOCAR energy subsidies			…	…	…	…	1,603
	Total grants (current)					13	61	111	28	57
Total expenditure						4,082	4,447	4,914	5,403	8,384
	Current expenditure					3,767	3,754	4,201	4,459	6,690
		Primary current expenditure				3,750	3,679	4,108	4,343	5,002
			Wages and salaries			811	956	1,090	1,187	1,278
			Goods and services			942	1,019	1,139	1,196	1,353
			Transfers to households			1,093	1,349	1,575	1,665	1,941
				Of which: social protection		943	1,139	1,330	1,334	1,575
					pensions	79	75	81	102	120
					scholarship	20	19	48	14	16
					other	52	116	115	215	229
			Subsidies			…	…	55	76	73
			Oil Fund operating expenditures			…	…	…	0	3
			Other			884	336	249	220	354
				Of which: extra-budgetary		626	252	202	195	303
			SOCAR energy related subsidies			…	…	…	…	1,603
		Interest				5	75	93	116	85
			domestic			11	16	21	32	28
			external			17	60	72	84	56
					Currant balance (deficit=-)	-397	-267	805	1,254	1,586
		Investment expenditure and net lending				316	693	713	943	1,694
			Domestically-financed			185	237	314	283	885
				Of which; Oil Fund		…	…	…	4	189
			Foreign-financed			130	456	399	660	809
Statistical discrepancy						-37	-65	229	64	33
Consolidated government deficit, cash basis						-675	-895	-137	247	-141
	Excluding Oil Fund (general government)					-675	-895	-806	-750	-1,101
	Excluding foreign project loans					-545	-439	262	907	668
	Excluding grants					-688	-956	-248	219	-197
Financing						675	895	137	-247	138
	Domestic (net)					233	-434	-686	-921	-793
			Banking system			124	-308	438	62	90
				Of which: Central bank		129	-345	228	-104	23
					Commercial banks	-5	37	210	167	67
				Of which: Oil Fund		…	…	-1,134	-1,105	-1,038
				Of which: T bills		0	36	41	54	-50
			Nonbank sector			0	0	0	-67	3
			Privatizations and other sale of assets			108	117	40	86	106
			Other			0	-140	-30	102	47
		External (net)				443	1,329	823	675	931
			Loans			443	1,340	850	709	988
				Project loans		154	457	394	679	844
				Oil bonuses		289	715	457	30	0
				World Bank SAC		0	168	0	0	144
			Amortization due			0	-12	-27	-34	-57

Sources: Ministry of Finance, State Oil Fund, Social Protection Fund; and Fund staff estimates.

Table 12.

Azerbaijan: Consolidated Government Operations, 1998-2002

(In billions of manats)

						1998	1999	2000	2001	2002
Total revenue and grants						3,370	3,487	5,006	5,714	8,276
	Total revenue					3,358	3,425	4,895	5,686	8,219
		Tax revenue				2,396	2,688	3,414	3,891	4,575
			Income lax			749	816	1,105	1,062	1,287
				Individual income tax		408	448	476	474	550
				Enterprise profits tax		340	368	629	538	737
			Social security contributions			437	458	563	565	641
			Value added tax (VAT)			719	791	957	1,266	1,674
			Excise taxes			95	114	112	555	433
			Taxes on international trade			293	318	494	300	376
			Other taxes			105	192	183	143	164
		Nontax revenue				961	738	1,481	1,795	2,041
			Of which: Oil Fund revenues			0	0	669	1,001	1,153
			Of which, extra-budgetary			615	230	202	207	310
			Tax credits for SOCAR energy subsidies			…	…	…	…	1,603
	Total grants (current)					13	61	111	28	57
Total expenditure						4,082	4,447	4,914	5,403	8,384
	Current expenditure					3,767	3,754	4,201	4,459	6,690
		Primary current expenditure				3,750	3,679	4,108	4,343	5,002
			Wages and salaries			811	956	1,090	1,187	1,278
			Goods and services			942	1,019	1,139	1,196	1,353
			Transfers to households			1,093	1,349	1,575	1,665	1,941
				Of which: social protection		943	1,139	1,330	1,334	1,575
					pensions	79	75	81	102	120
					scholarship	20	19	48	14	16
					other	52	116	115	215	229
			Subsidies			…	…	55	76	73
			Oil Fund operating expenditures			…	…	…	0	3
			Other			884	336	249	220	354
				Of which: extra-budgetary		626	252	202	195	303
			SOCAR energy related subsidies			…	…	…	…	1,603
		Interest				5	75	93	116	85
			domestic			11	16	21	32	28
			external			17	60	72	84	56
					Currant balance (deficit=-)	-397	-267	805	1,254	1,586
		Investment expenditure and net lending				316	693	713	943	1,694
			Domestically-financed			185	237	314	283	885
				Of which; Oil Fund		…	…	…	4	189
			Foreign-financed			130	456	399	660	809
Statistical discrepancy						-37	-65	229	64	33
Consolidated government deficit, cash basis						-675	-895	-137	247	-141
	Excluding Oil Fund (general government)					-675	-895	-806	-750	-1,101
	Excluding foreign project loans					-545	-439	262	907	668
	Excluding grants					-688	-956	-248	219	-197
Financing						675	895	137	-247	138
	Domestic (net)					233	-434	-686	-921	-793
			Banking system			124	-308	438	62	90
				Of which: Central bank		129	-345	228	-104	23
					Commercial banks	-5	37	210	167	67
				Of which: Oil Fund		…	…	-1,134	-1,105	-1,038
				Of which: T bills		0	36	41	54	-50
			Nonbank sector			0	0	0	-67	3
			Privatizations and other sale of assets			108	117	40	86	106
			Other			0	-140	-30	102	47
		External (net)				443	1,329	823	675	931
			Loans			443	1,340	850	709	988

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Abstract

IV. Tax Policy in Azerbaijan—Regional Context and Recent Developments

A. Tax Matrix

STATISTICAL APPENDIX