Impact of the crude oil price on the budget is profit tax paid by SOCAR and Azerbaijan International Operation Company, along with the SOFAZ transfers. SOFAZ’s budget transfers, which make up 45% of total budget revenues, don’t depend on crude oil price and the reason of accumulation of country’s oil revenues in the SOFAZ is to protect the state budget from risks to be arisen from price changes. Decline of profit tax by SOCAR and Azerbaijan International Operation Company by AZN 106.7 million as a result of the crude oil price fall up to $5 will reduce the state budget revenues by 0.6%.
Main indicators of the consolidated budget depending on oil price are revenues of the state budget and SOFAZ. According to the analyze of abovementioned indicators, in case the crude oil price drops $1, the state budget revenues will down AZN 41.6 million. Even in the worst scenario, share of the budget deficit in GDP will account for 1.8%, which is acceptable.
Analyze of the connection between SOFAZ revenues and crude oil price shows that 1% decline in crude oil price will reduce SOFAZ revenues by AZN 292 million and this will make up 14% of consolidated budget revenues.
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