Page 138 - Azerbaijan State University of Economics

THE PUBLIC INVESTMENTS IN AZERBAIJAN: THEORETICAL AND PRACTICAL ASPECTS

In our opinion, total capital expenditures directed to the investment

projects by the public agencies should not exceed the capital expenditures
considered in the state budget. In Azerbaijan, both public and some part of

private investments are financed through the budget funds. Thus during
2006-2011 National Fund of Entrepreneurship Assistance received 453.1

mln AZN, in 2004-2011 “Agrolizing” Ltd received 317.6 mln AZN and

the State Agency of Agricultural Credits received 40 mln AZN from the
budget. We believe that discrepancies in the Table 10 are due to different

approaches applied by both organizations.
In general, the role of the government in financing of large

investment project is still increasing. For example, the share of the

capital expenditures in total demand increased from 1.1% in 2000 to
9.9% in 2010. Such condition positively affects the industry of

construction raw materials. In 2010 the total production of construction
materials increased by 5.3 times in comparison with 2000. As we can see

on the Picture 5 below, the share of public investments in GDP is
increasing from year to year. At the same time effective from 2007 the

public investments account for more than the half of total investments

implemented in the country. Such a case can be explained by the
increase of the savings under the public control and decrease in

attraction of the foreign investments due to the fact that most of the oil
and gas projects passed to production stage. Thus the share of capital

expenditures in GDP increased from 10.8% in 2000 to 42% in 2004 and
further decreased to 5.7% in 2010.

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