English / ქართული / русский /

Annotation.Regardless of the level of development and management system, each state faces certain tasks, one of which is to ensure sustainable economic development. In other words, since the emergence of states, their goals, tasks and functions have been formed. Of course, all this is non-standard in time and space, and differences and changes in this area are inevitable. In all cases, the state needs to have centralized funds to fulfill its political, organizational, legal, socio-economic tasks and functions. The main source of the centralized cash fund is the state budget. These factors make it an objective necessity to adopt the state budget as an economic category. In addition, in our time, the state budget is also one of the main financial guarantors of sustainable development of the national economy.

The state budget, which is the material basis for the implementation of the tasks and functions of the state, occupies a special place in the system of financial relations, which are an important part of economic relations. The state budget is important as the basis for sustainable economic development and improvement of the socio-economic situation of the population.

The state budget is a set of financial relations between the state and enterprises (organizations) and the population. The characteristic features of these relations are that, firstly, they are formed with the participation of the state (its bodies) in distribution relations, and secondly, the state budget manifests itself in connection with the formation and targeted use of centralized funds in the financial sector. relations aimed at balancing the general production and consumer demand.

In general, the state budget is the main financial document for the collection and use of funds, necessary for the performance of duties and functions of the state and municipalities through the relevant central bodies. Also, as a historical economic category, which reflects the monetary relations as part of the financial system, the state budget is one of the most important tools for the implementation of socio-economic policy in the country. The formation and development of the state budget coincides with the formation of the state. The budget, which reflects the monetary relations as an integral part of the financial system, characterizes the creation and use of centralized monetary funds. The budget is the main financial support of the country and provides for the implementation of socio-economic policy, state regulation, defense and security.

Keywords: sustainable development, state budget, finance, monetary relations, economic growth, economic policy. 

Introduction. Regardless of the period, stage and level of development of the national economy, the state budget plays an exclusive role in the management of the country, and therefore the formation of the budget system, which belongs to the economic and management structure of the whole state. At the same time, the budget system, which is the central link in the financial system of the state, reflects all the parameters of quality, belonging to the financial category. However, at the same time as finances reflect the system of centralized and decentralized monetary relations, the state budget represents its own financial relations, related to the formation and use of central government. It turns out that finances have a wider range.

In fact, from the theoretical approaches to the formation of the budget, it is clear that the sources of budget revenues are different, as well as the direction of expenditures. Both are formed on the basis of socio-economic, organizational, legal and political views of the state, which are also formed in response to the demands of the times. Ignoring the economic views on the formation of the budget, the school has different views. In general, the main task of the budget is to provide financial support for the implementation of goals and functions of the state, as well as to ensure a stable growth of budget revenues [1, p.154-192].

In this connection, Professor S.M. Mammadov notes that the impact of the state budget on the development of the national economy, the stimulation of production and socio-economic development in the country is manifested as a quantitative, as well as a qualitative attitude. When we talk about the effect from the point of view of quantity, in what direction, how much money is directed and from the point of view of quality, the effect is manifested in two forms. Thus, on the one hand, it embodies the correct formation of the tax system and the efficient spending of funds, on the other - control over the economy through the state budget. Both have a qualitative impact on the economy. In addition, the state budget is considered one of the most important elements of state regulation of the economy at the macroeconomic level, as long as it is the most important tool for regulating the economy of the country "[2, p.135]. 

Main part. There are also different approaches to the ratio of the budget, which is the main financial support of the state, and economic growth. In particular, politicians and economists in developed countries disagree with the level of conditionality of fiscal policy. For example, while the concept of a balanced budget is widespread in the United States, in European countries with high spending and budget deficits, reducing these indicators is a key objective of fiscal policy. However, they do not consider it their main task to ensure a complete balance of the budget by assessing the real financial possibilities. At the same time, the ratio of the budget deficit to GDP is considered as a factor of economic growth. In some cases, the relationship between government spending and economic growth is a subject of serious debate for economists. Thus, according to the group of economists, in order to achieve economic growth, it is necessary to reduce certain expenditures of the state budget, optimize administrative intervention of the state in the economy and at the same time improve the tax system. Some economists argue that the redistributed part of GDP no longer meets the minimum material needs. However, all economists to substantiate their position refer to international experience, including the experience of Asian countries. Although the share of state budget expenditures in the GDP of these countries that have entered the market economy is small, the rates of economic growth are high [3; 4, pp. 112-151].

In general, one of the main goals of sustainable economic development is to constantly improve the living conditions of people without affecting the proportion of future generations. In this regard, budgetary spending and social issues, including improving the well-being of people and improving living conditions, are always priorities. Just as expenditures and budget revenues are interconnected, such expenditures as budget revenues are considered on the basis of certain conditions and norms. In other words, in accordance with income, there is a process of changing the direction and structure of expenses in order to further increase income in the future. Thus, depending on the socio-economic situation, state budget expenditures are constantly optimized and improved in accordance with economic, social, military and political goals. Although budget spending during emergencies, military conflicts and economic crises is mainly aimed at overcoming the situation, the main purpose of spending is not only social issues, but also to increase income in the future. In fact, all this is connected with the requirements and reality of the time, which forms the content of the budget. From this point of view, the socio-economic content of the budget, formed in accordance with the structure of income and expenses, stems from the requirements of sustainable development of our time, or rather corresponds to them.

From the study of the directions of the formation of the state budget in the conditions of market relations, it can be seen that one of the main sources of budget revenues is taxes. At the same time, although there are other sources of income, budget expenditures are wider, which is associated with the implementation of state goals. As already noted, the socio-economic goals of countries that are rapidly integrating into the world economic space follow from the requirements of sustainable development and international documents on sustainable development. In other words, the budget is the financial support of the state, the socio-economic and other goals of the state are realized at the expense of budget funds, which requires the coordination of expenditures with the goals of sustainable development. Using funds from the state budget, it regulates, finances and supports the development of the most important areas and thus ensures sustainable economic development.

Taking into account any economic and social measures, the stage of sustainable economic development requires reliable financial support. It should also be noted that reforms without reliable financial capacity are unlikely to give the expected results. This indicates that the economic and social development of each country is characterized by the level of taxes and other obligatory payments to the state budget and extra-budgetary funds. In addition, it is known that the amount of tax revenue depends on the existing tax base and tax potential. Consequently, in order to ensure the necessary level of resource provision for sustainable development, an effective mechanism of budgetary and tax planning and forecasting must correspond to the sources and possibilities of mobilizing revenues to the central budget and local budgets. The income level of certain budgetary circles depends more on the direct tax base.

Correct and fair implementation of fiscal policy, which is an integral part of the economic policy of the state, can lead to the development of the economy of any country with limited natural resources, otherwise the economy of any country with rich natural resources will decline. For example, Japan, Sweden, Belgium, the Netherlands and a number of Western European countries have achieved high rates of economic development with very limited natural resources. However, most of the countries of the former USSR, as well as the countries of the East, despite their enormous natural resources, were unable to achieve rapid economic development in all spheres of the economy. While one of the main reasons for this is the shortcomings and shortcomings of tax legislation and tax policy, another reason is that the impact of the tax system and tax policy on economic development is not justified.

Distribution and redistribution of gross domestic product and national income through the state budget consists of two simultaneous, interrelated stages - the formation of budget revenues and the use of budget funds (budget expenditures). Thus, the revenues and expenditures of the state budget are formed, that is, expenses are carried out at the expense of revenues, and the fulfillment of functions, responsibilities and the implementation of the goals of the state as a whole is ensured by ensuring their implementation. Both income and expenses vary depending on the current socio-economic conditions. Here the state acts as a common subject from the point of view of the interests of society, influencing the regulation of socio-economic processes, taking into account the sustainable development of the economic system in the country, defending common interests in various aspects.  From this point of view, the regulation of macroeconomic aspects in the national economy, the development of production and services and various forms of ownership, meeting the needs of the population, etc. makes the use of the state budget for the good of the country an objective necessity. Ultimately, all this is reflected in the budgetary and tax policy pursued in the country. For example, the fiscal policy of the Republic of Azerbaijan for 2019 supports various areas of income and expenditure. Thus, it is necessary to increase the share of non-oil revenues in GDP and budget revenues, agree on the basis for deducting personal income tax and contributions for compulsory state insurance, and apply a single simplified tax rate of 2% in the country. At the same time, in order to increase the level of tax collection, prevent tax evasion and reduce tax arrears, extend tax incentives for agricultural producers for the next 5 years to support the development of the non-oil economy and entrepreneurship in the form of dividends. Non-cash purchases of goods other than oil and gas to stimulate non-cash transactions in the field of exemption from income tax, long-term tax incentives for businesses for non-cash payments in retail and the public catering system, participation of manufacturers (individuals) in determining the real retail trade turnover, application of the principle reimbursement of part of the VAT paid to consumers, reduction of the “shadow economy” and economic recovery strengthening tax control measures over undocumented goods turnover, organizing tax-free income accounting and adjusting taxpayers' accounting data, distribution and redistribution of gross domestic product, national income, government regulation and stimulation of the economy, which is a source of financing of state socio-economic policy, control over its use in the process of formation and use of centralized financial funds, analysis of their revenues and expenditures by cities and regions, increasing the ratio of revenues from leasing state land to the budget, etc. directions were chosen as priorities.

Sustainable social policy, raising living standards, strengthening defense capabilities, ensuring reliable security, strengthening government care for the agricultural sector, improving the business environment, increasing production in the non-oil sector, strengthening the country's energy potential, especially renewable energy sources, improving budget spending, increasing transparency and others refers to the main expenditure items of the budget, each of which is important for sustainable socio-economic development [5; 6, pp. 132-175].

As in the developing and developed countries of the world, the private sector plays an important role in overcoming economic and social problems in the Republic of Azerbaijan. Thus, the role of the private sector in the formation of a fair competitive environment in the country, in providing the domestic market with goods and services, in meeting the needs of the population, in attracting labor and material resources is exceptional. At the same time, while business development in the private sector increases the tax potential of the region, tax incentives also stimulate the development of the private sector. These parameters show the relationship between business activity and tax potential, reaffirming that one is a motivating factor for the other. At the same time, in our opinion, in order to support the socio-economic development of the country's regions, increase the tax potential and the effectiveness of the results of ongoing reforms, it is advisable to implement the following [7, p. 112-136; 8, pp. 132-183]:

- better regulation and stimulation of private business in the regions, especially in the liberated Karabakh, by economic methods;

- strengthening the regulatory intervention of the state in economic processes and expanding the scope of the mechanism of state regulation of the market economy;

- further improvement of measures to create a fair competitive environment in the country, especially to achieve monopolization of production in the non-oil sector;

- to achieve an expansion of the tax base and an increase in tax revenues to the state budget by further improving the financial and credit, tax mechanism, tax rates, entrepreneurship and production in accordance with the economic potential of individual regions of the country.


Dynamics of changes in the GDP of the Republic of Azerbaijan in recent years

(in billions of manats  1 USD=1.70 AZN)


In recent years, dynamic changes have been observed in the GDP of the Republic of Azerbaijan. For example, the country's GDP in 2010 was 42.5 billion manat, in 2018 - 80.1 billion manat, in 2019 - 81.7 billion manat. The analysis shows that in recent years, the country's GDP has been growing as a result of the development of national economic sectors (Chart 1). Strengthening the tax potential of the regions of Azerbaijan and the dynamics of tax revenues in the state budget, with the development of business in the country, depends on a number of other factors. In this connection, the development of business in the country, the annual improvement of tax legislation in accordance with the economic environment and the level of development, the restriction of foreign interference in the activities of the state, the activity of the taxpayer. Of course, the continuation of such reforms will stimulate the development of the private sector at the expense of creating a favorable business environment, which, in turn, will stimulate the activity of taxpayers at the expense of increasing their efforts. In the whole system of macroeconomic indicators, which reflects the level of development of the state, also indicates a certain influence on the level of development of tax potential. Also, taking into account the direct impact of economic activity on the development of the tax base and budget revenues in the country, it is important to study the impact of gross domestic product (GDP), which is a key macroeconomic. This testifies to the purposefulness of the analysis of the impact of GDP on the tax base [9, p. 104-132].

It should be noted that the change in prices in the real sector of the economy in relation to    the demand and the proposal has an impact on the self-sufficiency of production and sales (occurs at different times). In turn, these processes change the structure of tax payments by individual types of taxes. In addition, the inflationary process in the country has a definite impact on the size of taxes, contributing to the budget, affecting growth and falling prices.

Research and analysis show that recently both regional and general economic and social development has accelerated in our country, the business environment and competitiveness have improved, effective employment has been ensured, and so on. Comprehensive measures are being implemented in the following areas: However, despite many reforms, the movement of fixed financial capital in the country is still concentrated mainly on the Absheron Peninsula and, to some extent, in large cities. Such factors indicate the weak development of financial and market infrastructure and the banking sector in the regions due to the concentration of funds in the capital. This, in turn, makes the objective need for an individual approach to assessing the tax potential of individual regions.

Therefore, the main condition for assessing the tax potential of the country and calculating the tax base on this basis is to ensure the formation of a system of indicators of regional and sectoral factors affecting development trends and prospects of the macroeconomic situation, as well as the actual structure of financial flows.

In this case, it is necessary to take into account the factors influencing the system of indicators necessary to determine the tax potential. According to their list to:

- the role of the region in the country's economy when calculating the general economic system of the country, including the tax potential of the region;

- conducting specializations in different sectors of the economy, taking into account the optimal location and operational characteristics of the sectors;

- the ratio of the region's population to the population living in cities, i.e. determination of the coefficient of urbanization;

- the share of the region in GDP and the volume of gross domestic product at the regional level;

- volume and share of industrial products in the region;

- the financial and economic situation of the main economic entities of the region, including

the interest rate of enterprises operating at a profit or loss;

- the state and dynamics of wages in the region (it should be borne in mind that information on wage arrears makes it possible to determine the share of income tax in budget revenues);

- collection of information about taxpayers in the region;

- the share and volume of exports at the regional level;


Result. Finally, it can be noted that the materials obtained as a result of the analysis serve as a database for calculating the gross income, economic, financial and tax base in the regions. This database helps to improve the accuracy of forecasts in this area, providing an idea of ​​economic growth in individual regions and the possibility of increasing tax revenues accordingly. These indicators play a special role in forecasting revenues and expenditures of the state budget. Such a system of indicators also makes it possible to objectively assess financial opportunities in various sectors of the national economy and regions, determining the interdependence of tax potential and macroeconomic factors.

Thus, studying financial and budgetary issues that are sources of financing for sustainable development and assessing the tax base also allows clarifying financial opportunities, which is very important for sustainable economic development. In fact, the basis for ensuring sustainable development is a certain financial position, which requires an assessment of financial and budgetary possibilities. At the same time, ensuring sustainable development with fiscal potential creates a certain  circle. That is, these two directions complement each other and support it. All this means that, despite the need for rich financial and budgetary resources, including a large tax potential, to ensure sustainable development, sustainable economic development, in turn, provides a larger and more stable financial support.

Every economic and social measure requires sustainable financial security. Research shows that reforms without reliable financial sources do not produce the expected results. At the same time, the sustainable economic development of any country is determined, among other things, by the amount of taxes and other obligatory payments to the state budget and off-budget funds. At the same time, to ensure the required level of resource provision for sustainable economic development, the system of budgetary and tax planning and forecasting transfers revenues to the state budget, local budgets, off-budget state funds, etc., should be based on the possibilities of sending and collecting. The level of income depends more on the base of direct taxation and the number of tariffs.

From this point of view, in order to ensure sustainable economic development in the country, development, improvement and stimulation of production, it is advisable to implement the following measures through the budget and tax mechanism:

- given the high risks of our time, the state will continue to focus on capital investments in the development of production in the country;

- continuing the practice of creating joint ventures and ensuring their development with the effective use of investments of foreign investors in order to ensure sustainable development;

- use of investments and tax credits to ensure the development of small manufacturing enterprises;

- exemption of newly created small industrial enterprises from tax payments for a period of at least five years;

- attraction of small manufacturing enterprises to the payment of income tax at a rate of 10-15% in a differentiated form depending on the regions of the country for three years in five years;

- general control by tax or other authorities over the activities of small industrial enterprises during the period of application of tax incentives, but the suspension of inspections. 


1. Aliev A.A. World economy: problems of the present / A.A. Aliev, A. Sh. Shakaraliev, I. Dadashov - Baku, 2003 .-- 455 p.

2. Mamedov S.M. Finance / S.M. Mamedov. - Baku: Azerneshr, - 1997, - 428 p.

3. Abbasov A.F. The role of financial policy in ensuring the economic security of the state // - Baku: magazine "Finance and accounting", - 2002. № 5, - p. 9-15.

4. Abbasov A.Kh. Formation of the financial market in Azerbaijan and the problems of the financial and credit system in a market economy / A.Kh. Abbasov. - Baku, 2003 .-- 364 p.

5. Atashov B.Kh. Financial theory. / B.Kh. Atashov, N.A. Novruzov, E.A. Ibrahimov - Baku: Cooperation, - 2014 .-- 648 p.

6. Guliev F.T. Nation and state incomes / F.T. Guliev. - Baku, 2004 .-- 328 p.

7. Atakishiev M.S. Azerbaijan on the way of socio-economic progress / M. Atakishiev. - Baku, 2005 .-- 262 p.

8. Aliev Y.K. Problems of the formation of a market mechanism in the economy of Azerbaijan / U.G. Aliev. - Baku, 2000 .-- 345 p.

9. Sadygov M.M. Problems of Determining the Main Directions of the State Debt Policy in the Formation of Financial Potential / M.M. Sadigov. - Baku, 2003 .-- 150 p.