February 8, 2021

– In general, the activities of the state should be financed by citizens. Mostly with the taxes and duties they pay. At the same time, the state pays for some public goods and services. Of course, the material and technical base of government bodies, as well as the construction and repair of buildings must be financed by these payments. That is not the problem. The problem is that the money paid by citizens to the state is not spent efficiently. That is why the burden on our citizens is growing. The majority of officials around the world tend to misappropriate public funds as much as possible, as well as spend them unnecessarily. An effective state is one that can minimize this possibility. Unfortunately, our officials possess ample means. The recent criticism of officials by the President confirms this. If they shamelessly call the President and offer to build unnecessary headquarters in Shusha, imagine the extent of waste and financial irregularities in other matters.


– The Tariff Council connects the increase in the price of both products with the cost price of those products and compares them with the prices of those products in other countries. But both products (water and diesel) are local products. In addition, if these government bodies are operating at a loss, is it so important for them to build new buildings? In other words, wouldn’t it be better to use those funds to prevent damage and think about the pockets of citizens?


– In general, as a result of the increase in tariffs, the state will receive even more than the cost of the construction of buildings, the price of which is repeatedly inflated. That is, the increase in tariffs is not just for these buildings. Buildings under construction or to be built are just one part of it. Of course, it is an important issue. Because it is the first thing people see. Of course, the need for these buildings is currently in question. So far, no organization has come forward and made a normal statement as to why a new building is needed. Therefore, there is an opinion in our society that there are two main reasons for the construction of new buildings: 1) government officials and bodies are arguing with each other (“My building is taller than all, more beautiful, etc.!”); 2) looting of public funds (mainly through “kickback”). So, without these constructions, tariffs probably would not have been increased so much. It is no coincidence that in his last speech, the President called on the people to strengthen public control. That is, the activity of our people directly affects their pockets. The stronger the public control over the expenditures of government bodies, the fewer taxes, duties, and tariffs will increase.


– By the way, one of the government bodies under discussion is the Central Bank. More precisely, the funds allocated for the new building for the Central Bank. The head of the Central Bank, Elman Rustamov, told the media that these funds are the Central Bank’s own funds. Does the Central Bank have its own funds and can it direct it to the construction of the building?


– According to the Constitution, the Central Bank belongs exclusively to the state. So, his property also belongs to the state. There are only a few pockets of the state, depending on the appointment and the source of funding. The Central Bank is one of those pockets. Elman Rustamov simply wanted to say that the construction will not be carried out at the expense of the state budget, which is the main pocket of the state. Let me remind you that the state budget is formed mainly due to taxes, duties, dividends of state companies, and so on. Another big pocket is the State Oil Fund: it is formed at the expense of oil revenues and its purpose is the welfare of future generations. The income of the Central Bank comes from the issuance of money (the cost of each issued banknote is many times less than its face value) and lending to banks. In fact, as in the rest of the world, our Central Bank returns money from the air by exercising the monopolistic power given to it by the people. But, of course, its money belongs to the people too. Therefore, of course, the Central Bank must be transparent and accountable to the people. But Elman Rustamov’s desire to open a branch in Shusha shows that this body is also far from the people.


– The second side of the issue is that after these discussions, as I said earlier, the prices of products produced by the government bodies under discussion were raised. The product of the Central Bank is manat. Now the fear is that the Central Bank may soon devalue manat in order to get these funds from citizens. Can we expect this?


– It is a slight possibility. Because the Central Bank does not allow the money weight to increase. That is, it gives less credit to banks. In a pandemic, demand for dollars is low as people’s incomes fall. Moreover, the exchange rate of the dollar in the world is in question. Oil prices also show an upward trend. Finally, by raising tariffs on gasoline, diesel, and water (leading to a greater concentration of the manat in the state), the government is already financially optimizing and will probably continue to do so. Under such conditions, the possibility of devaluation is slight.


– It is interesting that many of these bodies receive subsidies from the state budget. In such a situation, why are buildings being built for government bodies that receive subsidies from the state budget and operate at a loss? Why are they maintained at all?


– In general, it seems that the increase in tariffs will eventually put an end to the subsidy model. This is evidenced by the merger of state-owned companies under the umbrella of the Investment Holding. State-owned companies must cover their expenses from their revenues. Including construction and repair work.


– What would you suggest? In general, why are these bodies not privatized? Why is the burden of the state not reduced?


– Monopolistic state companies cannot be privatized. Especially in a small country like ours. There is a way to strengthen the financial discipline of not only these companies but also all government bodies in general: improve and comply with public procurement legislation, the organization of public control in this area. The current Law on Public Procurement is a very incomprehensible act. It is very difficult to work with it. Both because of this and because of corruption, the vast majority of government bodies do not comply with the law. For example, they do not publish their annual plans, do not conduct open tenders electronically through the procurement portal, and so on. Public control should be based on the information on the websites of government bodies about the movement of their budgets at least weekly. Even the price of the pen should be seen. I am not yet saying how many times a place has been demolished and rebuilt.


Source: Turan News Agency

Leave a comment.