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2007 Assessment

Azerbaijan: Integrity Indicators Scorecard

Azerbaijan: Integrity Scorecard Report > Sub-Category: Budget Processes
Indicators		Score
37	Can the legislature provide input to the national budget?	75
38	Can citizens access the national budgetary process?	33
39	In law, is there a separate legislative committee which provides oversight of public funds?	100
40	Is the legislative committee overseeing the expenditure of public funds effective?	13

Indicator and sub-Indicator Details

Can the legislature provide input to the national budget?

37a: In law, the legislature can amend the budget.

Score:

YES

Comments: The Law on Budget System, approved July 2, 2004 (article number 13), indicates that a draft budget be submitted to the parliament no later than Oct. 15, and the parliament is required to approve it by Dec. 20. During this period, the parliament has the right to amend the budget.

References: Reference: The Law on Budget System of Azerbaijan Republic.

Peer Review Comments: Article 23 also entitles the Parliament during any time until Oct. 15 to make changes to the budget. Reasons can be of different types: earnings are less than 80 percent of planned revenues, there are much more actual revenues, etc.

37b: In practice, significant public expenditures require legislative approval.

Score:

100

$Scoring Criteria :: 100 Score Criteria: All significant government expenditures (defined as any project costing more than 1% of the total national budget), must be approved by the legislature. This includes defense and secret programs, which may be debated in closed hearings. 50 Score Criteria: Most significant government expenditures (as defined) are approved by the legislature, but some exceptions to this rule exist. This may include defense programs, an executive\'s personal budget, or other expenses. 0 Score Criteria: The legislature does not have the power to approve or disapprove large portions of the government budget, or the legislature does not exercise this power in a meaningful way.$

Comments: All expenditures, except investment and reserve foundation's expenditures, require legislative approval. Although investment and reserve foundation's expenditures are discussed in the parliament, the Cabinet of Ministries approve those expenditures, and priorities are determined by the cabinet, not by the parliament.

References: Reference: The Law on Budget System of Azerbaijan Republic. Reports by the National Budget Group, www.nbg-az.org. Reports by "Expert Journal," www.ekspert.az. Reports by the Center for Economic and Social Development (CESD), www.cesd.az. Reports by Parliament of Azerbaijan Republic, www.parliament.az.

37c: In practice, the legislature has sufficient capacity to monitor the budget process and provide input or changes.

Score:

100

Comments: The legislature does not have sufficient capacity to monitor the budget process and provide input or changes.

References: Reference: Interview with Azer Mehtiyev, chairman of the Center for Economic Initiatives (August 2007).

Peer Review Comments: The Law on the Chamber of Accounts, article 1, states that The Chamber of Accounts is the full-time state budget and financial supervising body, which reports to the Parliament. The Chamber of Accounts has organizational and functional independence. Parliament also can make changes to the state budget any time, even during a budget year. If the proposal is put forth by the executive body, it must reach Parliament until Oct. 1 and Parliament has to review and make a decision till Oct. 15.

Can citizens access the national budgetary process?

38a: In practice, the national budgetary process is conducted in a transparent manner in the debating stage (i.e. before final approval).

Score:

100

Comments: The national budgetary process is not conducted in a transparent manner in the debating stage, since budget discussions are conducted in a closed circle. The public has access to the budget discussions and budgetary process only when the budget is discussed in the parliament for a short time.

References: Reference: Interview with Gubad Ibadoglu, chairman of the Economic Research Center (ERC) (August 2007). Reports by Transparent Budget Project. www.ekspert.az www.erc-az.org

Peer Review Comments: In general, the Parliament accepts the budget proposals submitted by the government in a non-transparent manner in the debating stage.

38b: In practice, citizens provide input at budget hearings.

Score:

100

Comments: Since no budget hearings are required in the legislation, no cases for holding budget hearings are in practice. Therefore, citizens are not able to provide input at budget hearings.

References: Reference: Interview with Gubad Ibadoglu, chairman of the Economic Research Center (ERC). Reports by the Economic Research Center. www.erc-az.org

38c: In practice, citizens can access itemized budget allocations.

Score:

100

Comments: In practice, citizens do not have access to itemized budget allocations. For instance, the defence and reserve foundation's share of expenditures of the total 2007 state budget is more than 60 percent, but neither citizens nor leading CSOs do not have access to itemized directions of those expenditures.

References: Reference: Reports by the National Budget Group. www.nbg-az.org Expert Economic Journal. www.ekspert.az Interview with Zohrab Ismayil, chairman of Free Economy Center.

In law, is there a separate legislative committee which provides oversight of public funds?

39: In law, is there a separate legislative committee which provides oversight of public funds?

Score:

YES

Comments: Under the law, there is a separate legislative committee that provides oversight of public funds, called the Chamber of Accounts, which was formed by the parliament.

References: Reference: Law on Budget System of Azerbaijan Republic.

Peer Review Comments: Additional source: The Law on the Chamber of Accounts

Peer Review Comments: In reality, the Chambers of Accounts only manage to cover a portion of the budget expenditures, due to limited personnel and resources. In addition, the Ministry of Finance also has a special department that deals with budget issues.

Is the legislative committee overseeing the expenditure of public funds effective?

40a: In practice, department heads regularly submit reports to this committee.

Score:

100

Comments: Department heads do not regularly submit reports to this committee, and there are no cases of them submitting the report to the parliament.

References: Reference: Rovshen Agayev, deputy chairman of the Economic Initiatives Center (August 2007). Reports by "Expert Journal."

Peer Review Comments: The heads of the agency provide data reports on spendings to the Chamber of Accounts but according to independent experts, these reports lack important details.

40b: In practice, the committee acts in a non-partisan manner with members of opposition parties serving on the committee in an equitable fashion.

Score:

100

$Scoring Criteria :: 100 Score Criteria: The committee is comprised of legislators from both the ruling party (or parties) and opposition parties in a roughly equitable distribution. All members of the committee -- including opposition party members -- are able to fully participate in the activities of the committee and influence the committee\'s work to roughly the same extent as any other member of the committee. 50 Score Criteria: The committee is comprised of legislators from both the ruling party (or parties) and opposition parties although the ruling party has a disproportionate share of committee seats. The chairperson of the committee may be overly influential and curb other members\' ability to shape the committee's activities. 0 Score Criteria: The committee is dominated by legislators of the ruling party and/or the committee chairperson. Opposition legislators serving on the committee have in practice no way to influence the work of the committee.$

Comments: The committee does not act in a non-partisan manner, and there are not representatives from opposition parties serving on the committee in the current parliament. Representatives of the opposition parties, however, have previsouly served as members of the committee.

References: Reference: Rovshen Agayev, deputy chairman of the Economic Initiatives Center. Reports by Transparent Budget Project in Azerbaijan. www.ekspert.az

Peer Review Comments: The role of opposition parties is marginal in parliament, so they are not capable of being formidable opponents.

40c: In practice, this committee is protected from political interference.

Score:

100

$Scoring Criteria :: 100 Score Criteria: This committee operates independently of the political process, without incentive or pressure to render favorable judgments on politically sensitive issues. Investigations are rarely praised or criticized by political figures. 50 Score Criteria: This committee is usually independent but is sometimes influenced by negative or positive political incentives. This may include public praise or criticism by the government. 0 Score Criteria: This committee is commonly influenced by personal or political forces or incentives. This may include conflicting family relationships, professional partnerships, or other personal loyalties that ultimately influence the committee\'s behavior and decision-making. Negative incentives may include threats, harassment or other abuses of power by the government.$

Comments: Both the president's office and senior persons of the parliament interfere with the committee's actions. Therefore, in practice, this committee is not protected from political interference.

References: Reference: Interview with Mehemmed Talibli, chairman of the Centre for Economic Innovation ( August 2006). Reports by Expert Economic Journal www.ekspert.az

40d: In practice, when necessary, this committee initiates independent investigations into financial irregularities.

Score:

100

Comments: There is not evidence, so far, that the committee initiates independent investigations into financial irregularities.

References: Reference: Interview with Mehemmed Talibli, chairman of the Centre for Economic Innovation (August 2006). Reports by "Expert Journal." www.ekspert.az

Peer Review Comments: The committee never initiated any independent investigations into financial irregularities.

Peer Review Comments: The Committee does not have the power to initiate independent investigations. It entirely depends on the executive.