AZE.US
Economist and opposition politician Natig Jafarli says businesses across different sectors in Azerbaijan are facing the same problem: there is no money in circulation, turnover has fallen, and sales and orders have sharply declined.
According to Jafarli, the stagnation in the car and real estate markets, the sharp drop in imports and the country’s zero economic growth all point to the same underlying issue.
He said the Ministry of Finance had been instructed to save budget funds, a step he described as reasonable in principle because unnecessary public spending should be reduced. The problem, he argued, is that Azerbaijan’s economy has been built around heavy dependence on budget spending.
“The model was created in such a way that money flowed into the economy from the budget, then circulated, and businesses received their share from that process,” Jafarli wrote.
He said that when budget expenses are sharply reduced, money stops moving through the system. According to him, this affects not only companies working directly with state orders, but also the wider chain of businesses and households connected to them.
Jafarli gave the example of a company building a school under a government contract. The company may use its own funds and borrowed money to begin construction, expecting budget financing to follow. But if the money is delayed for months, the contractor cannot pay suppliers for cement and reinforcement materials.
Those suppliers then cannot make their own planned purchases. A car seller loses a buyer. A homeowner postpones repairs. A repair worker loses income. A local shop owner does not receive the debt he was waiting for. A phone seller loses a customer. A guesthouse or business in Shamakhi loses a weekend visitor.
Jafarli said this chain reaction shows how deeply the broader economy depends on public spending.
“You cannot build a system that depends on the budget, then cut budget expenses sharply, save the money and place it as deposits in banks. In that case, the whole system stops, trade dies, incomes fall, and the economy becomes zero,” he said.
AZE.US