Journal number 4 ∘ Tariel Gurbanov ∘ Asif Mustafayev ∘
In the post-pandemic period, the assessment of the state budget and populations income in terms of GDP in Azerbaijan

Annotation. The presented article examines the relationship between the main macroeconomic indicators. In order to evaluate the macroeconomic processes taking place in the economy of Azerbaijan in recent years, a number of analyzes were carried out in the article. In particular, in the presentation of the main statistical indicators, the issues of state budget expenditures, revenues, GDP growth dynamics and population income growth were analyzed. The main economic reason for focusing on these indicators is that the correlation and dependence between them is stronger. It was mentioned in the article that in recent years, against the background of measures implemented by the state for the development of the national economy of Azerbaijan, the position of the country has been positively evaluated in a number of international ratings. It should be noted that the orders and decrees adopted by the President of the Republic of Azerbaijan in this direction should be specially emphasized. So, an example of this is the Order "On additional measures related to increasing the business environment in the Republic of Azerbaijan and further improving the position of our country in international rankings" signed on July 13, 2016 and the "National economy and economy 11" signed on December 6, 2016. "Strategic Roadmaps for the sector" Decree [1]. Reducing the dependence of the country's economy on oil, developing small and medium entrepreneurship, and making the national economy more competitive, goals have been set and corresponding steps are being taken. In particular, the measures taken to improve the business and investment environment should be positively evaluated. The mentioned processes will undoubtedly lead to the improvement of the country's economy in international rankings for various development indicators.

It was especially emphasized that among the measures to be taken, the role of the state in economic processes should be more effective, especially the fiscal policy should be effective. It should be taken into account that the main power here falls on the state budget. Optimizing incomes and expenses, increasing the efficiency of their use are among the factors that encourage the continuous development of the country's economy.

It should be taken into account that, unlike 2020, in 2021, a revival in the volume of global demand was observed, increased consumer spending under the influence of fiscal and monetary incentives, as well as an increase in investments, accompanied by economic recovery. Significant economic growth was recorded in both developed and developing countries, the significant difference compared to the previous year was possible due to the low base effect.

Keywords: budget expenditures, budget revenues, GDP, population incomes, EViews application software package, dynamics, regression, Fisher's criterion, macroeconomic processes, etc.

Introduction. In 2021, the restoration of economic activity accompanied by the gradual relaxation and removal of strict restrictions related to the "COVID-19" pandemic, a 6.7% increase in the consumer price index compared to last year, a 5.6% increase in GDP (non-oil gas 7.2% of GDP, against the background of the increase in oil prices in the global energy market, the profit tax of the contracting parties on production sharing agreements is 604.6 mln. AZN or 137.4% more, the increase of import volumes compared to the previous year (including a decrease in the specific weight of exemptions in import volumes compared to the previous year), the number of services and legal actions subject to state duty due to the removal of restrictive measures due to the pandemic, as well as 25427.0 mln. salary increase of employees working in the public sector. 969.3 million manats or 3.8% more than the approved state budget revenues, including a deficit of 239.8 million manats or 1.7% on oil revenues of the state budget, and 1209.0 million on non-oil revenues million manat or 10.4% in excess [7].

Main part. As a result of continuous economic reforms carried out in the country, sufficient positive indicators have been obtained in the development of the national economy of Azerbaijan. This can be clearly seen especially when making assessments from the point of view of macroeconomic indicators. It should be taken into account that when looking at the growth dynamics of GDP, which is considered the main indicator, it can be seen that this indicator has been positive with an increase of 80 percent in the last 10 years. Thus, while the GDP was 52 billion manats in 2011, this figure was 92 billion manats in 2021. In parallel, the growth dynamics of the non-oil sector was observed with a 1.5 times increase in 2021 compared to 2011 (21974.3 million manats for 2011 and 51082.9 million manats for 2021, respectively) ). The mentioned tendency was also observed in other socio-economic indicators. Thus, positive dynamics were seen in terms of investment, the main indicators of the state budget and the income of the population. Undoubtedly, the growth of budget revenues and the income of the population is of particular importance in economic development. It acts as a result of economic development in one direction, and as a driving factor on the other. The presented graph shows the weight of budget revenues in relation to GDP for the last 10 years (see graph 1).

 

Chart 1. Weight of budget revenues in GDP, in percentage.

Note: The graph was compiled by the authors based on the statistics provided by the Central Bank. [6].

In addition, on the other hand, it is necessary that the price of 1 barrel of oil during the transfers of oil revenues to the budget for 2021 is set at 50 US dollars. In the first 5 months of 2022, if we consider that the price of 1 barrel of oil is 106 US dollars, the transfers of oil revenues within the budget revenues can be considered stable. In particular, it should be emphasized that during the first 5 months of 2022, looking at the statistical figures, it is clear that the state budget has a surplus of 2 billion manats. Also, the amount of taxes collected by the State Tax Service was 2 billion manats more than the predicted rate. The occurrence of such compliance can justify an increase in budget revenues for the following years.

Budget parameters are considered one of the economic instruments that have a significant impact on macroeconomic processes. Along with the economic content, the budget expenses have social, political, socio-cultural, etc. has a significant role in the realization of processes. It is generally accepted that budget expenditures should be directed to the most effective and efficient areas. However, the events taking place in the country's socio-economic, socio-political and natural environment result in a sharp increase in budget costs, which in turn leads to serious economic consequences. Therefore, it is very important to use the budget costs and determine their size as accurately as possible. In this aspect, international rating organizations for countries around the world make certain calculations and define indexes.

In the general approach, it is noted that the assessment of budget expenditures has a relative nature. So, even though the minimal state spending on achieving economic freedom seems to be a positive thing, its other negative consequences are more, or on the contrary, the share of state spending in GDP is higher than 30 percent, which sharply worsens the position on economic freedom. Therefore, it is appropriate to determine the acceptable "interval limit" of state expenses (budget expenses).

Looking at the budget expenses, we can note that both the dynamics of the expenses and the directions of use in recent years can be positively evaluated (see graph 2).

 

Graph 2. Weight of budget expenditures in GDP, in percentage.

Source: [4].

It can be seen from the presented graph that the budget expenses were partially variable and stable during the years 2010-2015. However, in 2020, it characterized the largest specific gravity of the last 10 years. The main reason for this is the increase in the costs of Azerbaijan's civil war and the increase in infrastructure costs. From 2021, its specific weight in the GDP decreased again to the level of 2019. Undoubtedly, this weight loss or increase cannot be approached unilaterally. Because, during these years, there have been changes in the volume of GDP that will characterize both quantitative and qualitative changes.

Dependence of monetary income of the population and state budget income on GDP.

It is important to use empirical methods when calculating the impact of the population's monetary income and state budget income on GDP and the dependence between them, as well as when calculating the development forecasts of those areas.

The table below shows the statistical data of those indicators for the years 2010-2021.

 Table 1.

Years	State budget revenues, (X1)	People's incomes, (X2)	GDP (Y)
2010	11403	25605,6	42465
2011	15700,7	30524,6	52082
2012	17281,5	34769,5	54743,7
2013	19496,3	37562	58182
2014	18400,6	39472,2	59014,1
2015	17498	41474,8	54380
2016	17505,7	45395,1	60425,2
2017	16516,7	49187,9	70337,8
2018	22508,9	53103,7	80092
2019	23168	56769	81896,2
2020	24124	55754,1	72578,1
2021	25427	57181,5	92857,7

Source: The table was prepared by the authors based on the statistical materials of ARDSK [5].

Using the data of Table 1, if we evaluate the impact of the population's monetary income and state budget income on GDP using the EViews-12 software package, we will get the following result (table 2).

Table 2

Dependent Variable: Y
Method: Least Squares
Date: 09/20/22   Time: 10:53
Sample: 2010 2021
Included observations: 12
Variable	Coefficient	Std. Error	t-Statistic	Prob.
X2	0.896804	0.314816	2.848659	0.0191
X1	1.150684	0.833004	1.381366	0.0005
C	3589.639	2451.768	1.464102	0.0536
R-squared	0.892290	Mean dependent var		64921.15
Adjusted R-squared	0.868354	S.D. dependent var		14681.68
S.E. of regression	5326.953	Akaike info criterion		20.21126
Sum squared resid	2.55E+08	Schwarz criterion		20.33249
Log likelihood	-118.2676	Hannan-Quinn criter.		20.16638
F-statistic	37.27884	Durbin-Watson stat		1.987735
Prob (F-statistic)	0.000024

 Source: Developed by the author based on the Eviews-12 application software package.

As can be seen from Table 2, which was obtained based on the EViews application software package, the coefficients of the variables reflecting the causal factors are larger than their standard errors. This characterizes the statistical significance of the obtained result [3, p. 310].

        According to the result obtained according to the Eviews application software package, the regression equation will be as follows:

Estimation Command:

=========================

LS Y X2 X1  C

Estimation Equation:

=========================

Y = C(1)*X2 + C(2)*X1 + C(3)

Substituted Coefficients:

=========================

Y = 0.89680425273*X2 + 1.15068415084*X1 + 3589.63902672

Y = 1,1507x₁ + 0,897x₂ + 3589,639 (Table 1)

The statistical significance of the multiple regression equation can be checked with the help of the F-Fisher test. For this purpose, the F-Fisher criterion should be compared with the value of F-table (а;m;n-m-1). According to the tabular data showing the result of the EViews software package,

F-statistic (Fisher's criterion) = 37.3 (Table 2)

        If we set the F table value in EXCEL with the help of F_table (а;m;n-m-1)=F formul.

F-table (а;m;n-m-1)=(0.05;2;9)=3.89

When comparing the F-Fisher criterion with the value of, it can be seen that the F-Fisher criterion 3,89. F-Fisher criterion  (37.3 3,89)/ This means that the regression equation as a whole is statistically significant and the established table (1) is adequate.

Since the Darbon-Watson statistic is DW=1.988, the Darbon-Watson break points for one explanatory variable (m=2) and n=12 observations at the α=0.05 significance level will be as follows [3, p.322]

 d_l = 0,812      d_u = 1,579

d_u= 1,579 ≤DW = 1,988 ≤ 4 - d_u = 2,421, autocorrelation was not determined. This means that the regression equation is statistically significant as a whole and the established model

 Y = 1,1507x₁ + 0,897x₂ + 3589,639

is adequate as a whole [2, p. 322]. If we calculate the elasticity coefficient according to the coefficient of the free variables in the relationship equation and the average values ​​of the volume of GDP with the causative factors for the studied periods, we will get the following result [2, p.149].

Conclusion

The analysis of the main macroeconomic indicators in Azerbaijan suggests that there is a certain relationship and dependence between them. The evaluation showed that we can say that there is a sufficient degree of dependence between GDP and budget revenues. Thus, based on the analysis, it was found that a 1% increase in the state budget income in Azerbaijan results in a 0,34% increase in GDP, and a 1% increase in the population's cash income results in a 0,61% increase in GDP. The dynamics of the population's incomes shows that as entrepreneurship develops, entrepreneurial incomes increase, its specific weight is 30-40%. Transfer income increases with the increase of pensions and allowances. The financial source of transfers is the state budget and mandatory social insurance payments of legal entities and individuals to the social protection fund: 22% + 3% (22% to the social insurance fund and 3% to each person). By the end of 2021, the number of economically active population was 5303,9 thousand, of which 4988,2 thousand were employed. It should be taken into account that the average monthly nominal salary of salaried employees increased by 3,4% in 2021 and amounted to 732,1 manats. The nominal income of the population increased by 2,6% in 2021 compared to 2020 and reached 57,2 billion. formed manat.

References

1. "Strategic Road Map of the perspective of the national economy of the Republic of Azerbaijan" approved by the Decree of the President of the Republic of Azerbaijan dated December 6, 2016.

2. Yadigarov T.A. Solving operations research and econometric problems in MS Excel and Eviews software packages: theory and practice. Baku-2020. 352 pages.

3. Yadigarov T.A. "Customs statistics and modern information technologies". (Monograph) Baku, "Europe" publishing house, 2020. 520 p.

4. https://ru.tradingeconomics.com/azerbaijan/government-spending-to-gdp

5. stat.gov.az

6. https://www.cbar.az/page-41/macroeconomic-indicators

7. https://sai.gov.az/rey/94

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