OREANDA-NEWS. May 25, 2012. Correction of the Law on State Budget 2012 prepared by the Ministry of Finance of Azerbaijan has led to a change in the budget forecast of oil price.

The Azerbaijani government reports that the forecast of average oil export price in 2012 was increased by 20% - from USD 80 up to USD 100.

"Despite the volatility in world oil prices and even their tendency to lows, an increase of the forecast does not constitute a danger to the state budget. We’ve already spent almost half a year with oil export price of USD 120 per barrel. Thanks to that, even in case of a fall in world oil prices to USD 80 the average export price of Azeri oil in 2012 will hardly be less than USD 100 a barrel," a government source said.

Earlier the Finance Ministry informed that the country’s budget would be increased by AZN 600 million. As a result, its profitable part will amount to AZN 17.039 bn and expenditure part AZN 17.67 bn. The budget will be increased due to additional tax revenues from oil and non-oil sector.

President Ilham Aliyev has already introduced the draft amendments to the Law to the country’s parliament, and tomorrow the parliamentary committees will consider it.

The budget expansion is motivated by unforeseen costs on restoration of housing and socio-economic infrastructure after the catastrophic earthquake in the northwestern part of the country on 7 May; additional measures to address the consequences of a catastrophic flood of the Kura and Arax rivers in 2010, and the need to eliminate the effects of ground water rise in Baku and its suburbs; additional expenditures on defense and security.