BAKU, Azerbaijan, Dec.27
By Leman Zeynalova – Trend:
With oil production on a declining trend, mobilization of non-oil tax revenue in Azerbaijan is critical for strengthening long-term fiscal sustainability, Trend reports with reference to the International Monetary Fund (IMF).
“Non-oil tax revenue as a share of nonoil GDP has not increased to compensate for the gradually declining importance of oil revenues. To maintain consolidated revenues at 30 percent of GDP beyond 2026, nonoil tax effort will need to increase by 1.3 percent of nonoil GDP in 2027, and gradually rise by 10.8 percent of nonoil GDP in 2040. Clearly, as Azerbaijan transitions to a more diversified economy, additional revenues will need to be mobilized from the nonoil sector,” IMF said in its latest report.
The financial institution believes that tax reforms will be needed to reorient revenue mobilization to nonoil sector development.
“Several directions are possible over the longer term, but the groundwork for these reforms, including strengthening the capacity of the tax administration, must be laid sooner. To ensure sustainable financial deepening where increases in credit supply and demand go hand in hand, reforms need to include measures to strengthen bank supervision and regulation, promote SME financial literacy and improve financial sector transparency,” the report says.
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