BAKU, Azerbaijan, February 17. The result-based budget system hasn't yet been fully institutionalized in Azerbaijan despite the ongoing application of the Medium Term Expenditure Framework (MTEF) and the result-based budget mechanism in the country, Trend reports via the State Audit journal of the Chamber of Accounts for 2025.
According to the journal, two parallel budget planning models are currently operating in the country. One of them is the order-based budget regulated by the law "On the budget system", and the other is the results-based budget model based on the MTEF rules. The journal noted that this parallelism complicates forming a unified and consistent approach in the budget process.
The assessment of the Chamber of Accounts indicates that the integration between the goals set in strategic documents and the planning of budget expenditures is weak. At the same time, since the methodological framework for result indicators hasn't been fully formed, the effective application of the results-based budget mechanism is limited.
The chamber emphasized that ensuring fiscal discipline requires strengthening fiscal responsibility in all processes of public finance management, from the budget preparation stage to the application and reporting stages. Fiscal responsibility is considered the main mission of the Supreme Audit Institutions, and in Azerbaijan, this function is performed by the Chamber of Accounts.
Moreover, the chamber noted that the prerequisite for fiscal discipline is the establishment of appropriate institutions and regulatory mechanisms for public finance control. In this context, the application of budget rules at the macro-fiscal level is of particular importance. Fiscal rules cover not only quantitative indicators, but also procedural approaches.
In this regard, the application of the MTEF and activity budgeting or result-based budgeting institutions at the planning stage, which forms the basis of budget processes, is assessed as one of the main conditions for a more economical, efficient, and result-oriented use of public funds. The Chamber of Accounts, as the supreme audit institution, acts as an active initiator of the application of these institutions in the country.
At the same time, the chamber noted that the effective functioning of the results-based budget system further enhances the role of efficiency (performance) audit. This type of audit allows assessing the economy, efficiency, and effectiveness of programs, projects, activities, management, and information systems. Although the general methodological approaches to performance auditing currently applied by supreme audit institutions in most countries of the world are similar, the forms of application of this audit differ in individual countries and organizations.
According to the Chamber of Accounts, the full formation of the MTEF and result-based budget institutions can significantly contribute to reducing fiscal risks, increasing the effectiveness of budget expenditures, and strengthening transparency in public financial management.