Support to the Center for Analysis and Communication of Economic Reforms under the President of the Republic of Azerbaijan in Legislative, Institutional and Economic Reforms in the Fiscal Sector

PMCG is engaged in a framework contract awarded by the European Commission in the consortium led by ADE under lot 11 – Macro-economy, public finance and statistics.

The aim of this assignment is to provide assistance to the Center for Analysis and Communication of Economic Reforms under the President of the Republic of Azerbaijan in reforming fiscal policy and legal framework.

The specific objective of the project is to provide support in reviewing fiscal policy, institutional setup and legal framework, to formulate recommendations on improving the fiscal policy and the institutional setup in line with European best practice, further approximation of fiscal legislation to the EU acquis.

Specifically, the group of experts are working on the following requested services:

• Review of the current fiscal policy, legal framework and institutional setup;
• Presentation of European best practice in institutional setup in the fiscal field with specific focus on mandate and institutional anchoring and EU acquis;
• On the basis of the review, development of recommendations for improvement of the fiscal policy and institutional setup;
• Review of the current fiscal legal framework;
• Update Scoreboard Papers on Approximation of Azerbaijani Legislation to EU Law on Taxes.

As a result, the Center will have a review report of the current fiscal policy and institutional setup with weaknesses and gap analysis, including recommendations for improvement. The project will enhance the understanding and increase the awareness within the government of European best practice in institutional setup in the fiscal field with a specific focus on mandate, institutional anchoring and the EU acquis.

Background information:

As a response to the new geopolitical situation following its enlargement in May 2004, the European Union (EU) adopted a new framework for relations with its neighbors, the European Neighborhood Policy (ENP). The ENP aims to go beyond the existing Partnership and Co-operation Agreements to offer neighboring countries the prospect of an increasingly closer relationship with the EU with the overall goal of fostering the political and economic reform processes, promoting closer economic integration as well as legal and technical approximation and sustainable development.

The central element of the ENP is a bilateral Action Plan which clearly sets out policy targets and benchmarks through which progress with an individual neighboring country can be assessed over several years. Priority Area 6 is “support to balanced and sustained economic development, with a particular focus on diversification of economic activities, development of rural areas, poverty reduction and social/territorial cohesion.”

Now Azerbaijan is interested in both further development of market economy by easing tax burden and strengthening the tax collection, especially regarding indirect taxes. Furthermore Azerbaijani Government makes efforts to attract more investors to country’s economy.

Centre for Analysis and Communication of Economic Reforms was established in April 2016 in order to broaden the coverage of economic reforms and manage effective coordination of the works in this area.

The Center conducts feasibility study and risk analysis of state programs, strategies and economic-promotion projects, does monitoring and evaluation of performance industrial parks, districts, and agro-parks, as well as economic oriented state programs, conducts economic efficiency of completed state programs and public investment projects, and prepares proposals on economic reforms. Currently the Center develops Strategic Road Maps on all 11 priority directions identified by the Presidential Decree.