## 1. Priority Recommendations

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**Canonical URL:** [1. Priority Recommendations](https://www.imf.org/-/media/files/publications/cr/2022/english/1azeea2022001.pdf)

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---

### Summary of mission outcomes and priority recommendations
- Mission context:
  - CCAMTAC launched in February 2021; TA missions conducted remotely via Zoom during May 17−21 and July 22−August 4, 2021.
  - Missions conducted by Mr. Roderick O’Mahony (GFS expert) working with staff of the Ministry of Finance’s MTEF Development Center; meetings with SOFAZ, the State Employment Agency, and the State Social Protection Fund.
- Authorities’ stated needs:
  - (a) address and clarify compilation issues arising from annual GFS reported earlier to STA;
  - (b) improve GFS time series data as an input for decision making;
  - (c) strengthen staff capacity for compilation and dissemination of GFS.
- Assessment highlights:
  - Quality of annual GFS for general government is broadly adequate but requires further improvements and clarification of compilation and source-data issues.
  - Need to develop “soft” infrastructure: bridge table between budget codes and GFS codes and a public sector institutional table (PSIT).
  - Need for better coordination between GFS compilers and source data providers.
- Intended benefits:
  - Building high-quality GFS time series (starting annual, with a view to higher frequency) to enhance fiscal policy analysis, budgeting, medium-term forecasting, and fiscal transparency; compiling comprehensive GFS including balance sheet data and PSDS to provide integrated stock-flow presentation.

### Priority recommendations (selected, with responsible institutions and dates)
- October 2021
  - Complete a bridge table between the budget codes and the GFS codes in both Azerbaijani and English.
  - Responsible Institutions: Ministry of Finance, MTEF Development Center
  - Note: Authorities started work but action not completed as of end-October 2021.
- December 2021
  - Complete a public sector institutional table covering all institutional units which belong to general government.
  - Responsible Institutions: Ministry of Finance, MTEF Development Center in collaboration with relevant agencies
- July 2022
  - Establish memoranda of understanding for data sharing between the MTEF Development Center and important source data providers, such as the Public Debt and Financial Liabilities Management Agency.
  - Responsible Institutions: Ministry of Finance, MTEF Development Center

### Context and institutional background
- CCAMTAC role and objectives:
  - Launched February 2021 to deliver practical advice in macroeconomic management and statistics; deepen engagement through awareness of member countries’ institutional, legal, and policy frameworks.
- MTEF Development Center (established 2019) — objectives and responsibilities:
  - Main objective: formulate macro fiscal policy.
  - Other goals: (i) assessing fiscal risks and management; (ii) prioritizing expenditure directions within a multi-resource package based on a sustainable fiscal framework (budget rule); (iii) creating conditions for results-based budgeting and measurable indicators.
  - Responsibilities include approving MTEF preparation guidelines; sending detailed instructions to budget organizations; receiving base forecasts and New Policy Initiatives; sending inquiry letters for annual reports aligned with GFSM 2014; obtaining GFSM 2014–based reports from relevant agencies (State Statistics Committee, SOFAZ, State Social Protection Fund, Unemployment Insurance Fund); summarizing reports and sending them to the IMF.
  - Various macro-fiscal models, stress tests, and scenarios are used for analyses.

### Use of GFS in operations and surveillance
- Authorities provide operational fiscal data for Fund surveillance (state budget and consolidated budget aggregates). GFS reported to STA separately.
- Consolidated budget covers state budget, Nakhchivan Autonomous Republic, State Social Protection Fund, Unemployment Insurance Fund, and SOFAZ.
- Breakdown for the state budget does not follow the GFS economic classification; consolidated budget data include a note on calculations. Only annual data are provided.
- Underlying data were found consistent between GFS and fiscal data for Fund surveillance.
- Issues that could affect surveillance:
  - Treatment of government transfers via the contingency fund (see classification issues).
  - Sectorization of public sector entities (see recommendations to complete PSIT).

### Detailed technical assessment and recommendations — Addressing compilation issues
- Current reporting status:
  - Azerbaijan reports annual GFS for general government covering transaction data (nonfinancial and financial transactions reported; COFOG Table 7 reported). No balance sheet data (Table 6) reported.
  - Institutional coverage specified as: budgetary central government (state budget), extrabudgetary central government (SOFAZ), social security funds (State Social Protection Fund and Unemployment Insurance Fund), state government (Nakhchevan Autonomous Republic), and local government (municipalities).
- Specific classification and compilation issues (key figures preserved exactly):
  - Contingency fund of the State budget:
    - Transfer from the PDFLMA to the contingency fund amounting to 396.2 million manat in 2020 would be mostly financial transactions: repayment of loans by public corporations to the PDFLMA which then put the money in the contingency fund. The transfer appeared to include a portion corresponding to payments of interest and fees, which would be classified as revenue for the State budget (nonfinancial transaction); GFS compilers to check with PDFLMA.
    - Part of the transfer from the Central Bank of Azerbaijan to the contingency fund, totaling 1 billion manat in 2020, would be classified as revenue for the State budget under “withdrawal of income from quasi-corporations” (reflecting 52 million manat reported as entrepreneurial profit by the Central Bank); the remainder (948 million manat) should be recorded as a financial transaction under “withdrawal of equity”.
  - SOFAZ:
    - Purchase of gold bullion by SOFAZ should be recorded as acquisition of nonfinancial assets (valuables); authorities’ classification as nonfinancial assets (valuables) was agreed as correct.
  - Unemployment Insurance Fund:
    - Some cash receipts that were recorded as revenue (collections of previous years’ contributions) should be classified as a financial transaction (change in currency and deposits).
    - Note: The Unemployment Insurance Fund is not covered in the GFS dataset reported by the Azerbaijan authorities. The mission advised that the entity should be included as part of Social Security Funds.
- Compilation outputs:
  - Mission and authorities compiled an initial draft of annual GFS data for 2020 where source data were available (Appendix 1). These figures are initial estimates on a preliminary basis; authorities expected to report annual GFS to STA later when work completed.
- Missing elements and recommended actions:
  - Consumption of fixed capital (CFC) is a key missing element needed to complete Table 2 (Expense) and derive net investment in Table 3; as Azerbaijan reports cash-based GFS, CFC must be estimated using statistical techniques requiring a robust estimate of the stock of nonfinancial assets and depreciation assumptions; authorities agreed to attempt estimation and provide estimated CFC data to the mission.
  - Lack of balance sheet data is an important area for improvement; mission recommended starting with selected parts of the financial balance sheet, particularly debt instruments (debt securities and loans) for which source data are readily available.
  - Completeness of institutional coverage of GG data needs to be established; mission recommended completing a PSIT and reassessing comprehensiveness.

### Detailed technical assessment and recommendations — Building institutional infrastructure
- Current institutional resources:
  - Responsibility for compiling and disseminating GFS assigned to the MTEF Development Center where currently [two] GFS compilers are dedicated to the task; compilers familiar with GFSM 2014.
- Recommended tools and priorities:
  - Bridge table between budgetary codes and GFS codes:
    - Authorities agreed to set up a bridge table; mission recommended high priority and completion by October 2021.
  - Public sector institutional table (PSIT):
    - Authorities agreed to prepare initial draft; mission recommended high priority and completion by December 2021.
  - Database management system:
    - Mission recommended establishing a more robust system for GFS compilation; initial approach could be a set of Excel files for nonfinancial and financial accounts, with an eventual move to an appropriate database system.
- Capacity development:
  - GFS compilers expressed need for sustained capacity development support; mission provided practical implementable recommendations to build institutional infrastructure.

### Institutional arrangements and data sharing
- Establish an inter-agency technical working group on GFS and assign responsibilities for data collection and compilation to the relevant agencies.
- Establish memoranda of understanding between the MTEF Development Center and the source data providers, including the Public Debt and Financial Liabilities Management Agency and SOFAZ, who are part of the technical working group.
- Mission recommendation: assign high priority to establishing the memorandum of understanding between the MTEF Development Center and important source data providers, such as the Public Debt and Financial Liabilities Management Agency.
- Target completion date for the memorandum of understanding between the MTEF Development Center and important source data providers: July 2022.
- Rationale: these arrangements would allow for transfer of more timely and comprehensive source data and opportunities to discuss and clarify new types of transactions that may occur occasionally.

### Follow-up, training, and sector classification guidance
- Follow-up and technical assistance:
  - Priority recommendations mostly relate to building key elements of the institutional infrastructure.
  - Authorities could consider requesting follow-up TA missions to address issues arising during implementation.
  - Authorities are encouraged to collate necessary information and data on these issues and discuss TA needs with the GFS-PSDS resident advisor at the CCAMTAC.
- Strengthening staff capacity:
  - Mission provided training sessions covering overview of GFS, institutional sectors, and balance sheet data; demonstration of how Azerbaijan’s actual data fit in the tables in the IMF’s annual GFS database.
  - Training participants included source data providers from SOFAZ, the State Employment Fund, and the State Social Protection Fund.
  - Outcome: GFS compilers and source data providers were more sensitized on various issues arising from GFS compilation and the need for continuously improving GFS.
- Mission advice on sector classification and the market test:
  - Collect information necessary to classify a public sector entity into the appropriate sector and subsector.
  - Sectorization principle: an entity belongs to general government if it is run on a commercial basis as a non-market producer.
  - Apply the “market test”: if the value of sales to individuals and private corporations exceeds 50 percent of the cost of production, the entity is considered commercial (public corporation); otherwise it is a non-market producer (general government).
  - To apply the market test, require information on the amount of revenue received by each public entity by revenue category, with the amount received from other public entities separately identified.
- Continued training needs:
  - Continued training for GFS compilers, especially using actual source data and the questionnaire used for reporting annual GFS, is essential.
  - Training for source data providers to present their data in a GFS-consistent format is useful.
  - Assist source data providers in creating a bridge table to map existing accounting data to a GFS-consistent format to accelerate compilation and ensure accuracy.

### Action plan — summary of key actions and target completion dates
- Outcome: Data are compiled and disseminated using the coverage and scope of the latest manual/guide
  - H All institutional units in the general government sector are identified in the public sector institutional table.
    - Target Completion Date: December 31, 2021
  - H Transaction data cover all significant general government units.
    - Target Completion Date: July 31, 2022
  - M Financial balance sheets cover the majority of financial assets and liabilities for all significant general government units
    - Target Completion Date: December 31, 2022
- Outcome: Data are compiled and disseminated using the concepts and definitions of the latest manual/guide
  - H A bridge table between the budget codes and the GFS codes is completed both in Azerbaijani and English.
    - Target Completion Date: October 30, 2021
  - H PSDS for budgetary central government covering loans and debt securities are compiled.
    - Target Completion Date: April 30, 2022
  - M PSDS for general government covering loans and debt securities are compiled.
    - Target Completion Date: December 31, 2022
  - H GFS for budgetary central government covering transactions are compiled using the GFSM 2014 framework, concepts, and definitions.
    - Target Completion Date: April 30, 2022
  - H GFS for budgetary central government covering financial balance sheets are compiled using the GFSM 2014 framework, concepts, and definitions.
    - Target Completion Date: December 31, 2022
  - M GFS for general government covering transactions are compiled using the GFSM 2014 framework, concepts, and definitions.
    - Target Completion Date: July 31, 2022
  - M GFS for general government covering financial balance sheets are compiled using the GFSM 2014 framework, concepts, and definitions.
    - Target Completion Date: December 31, 2022
- Outcome: Legal/institutional environment and data sharing arrangements are conducive to compile and disseminate statistics
  - H An inter-agency technical working group on GFS is established and responsibilities are assigned for data collection and compilation to the relevant agencies.
    - Target Completion Date: October 31, 2021
  - H Memoranda of understanding are established for data sharing between the MTEF Development Center and the important source data providers.
    - Target Completion Date: July 31, 2022

### Officials met during the mission
- Mr. Ilham Karimov — Director, MTEF Development Center, MOF
- Mr. Rashad Hasanov — Deputy Director, MTEF Development Center, MOF
- Ms. Gunel Aliyeva — Leading Specialist, MTEF Development Center, MOF
- Ms. Sevinc Eliyeva — Specialist, MTEF Development Center, MOF
- Ulker Gadirova — Chief Specialist, International Corporation Department, MOF
- Aydan Vuset — Chief Specialist, International Corporation Department, MOF
- Mr. Kamal Qasimov — Leading Specialist, MTEF Development Center, MOF
- Ilkin Rahimov — Chief Specialist, Finance Department, State Employment Agency
- Dinara Pashayeva — Chief Specialist, Finance Department, State Employment Agency
- Farid Orujov — Leading Advisor, Accounting Department, SOFAZ
- Konul Javadova — Senior Analyst, Risk Management Division, SOFAZ
- Emin Alirzayev — Deputy Director, Finance Department, State Social Protection Fund

### Appendix I — selected preliminary annual GFS data for 2020 (figures preserved exactly)
- Revenue (Table 1) — key lines:
  - REVENUE ....................................................................................................................... 24,733.8 24,733.8 537.7 27.2 25,298.7
  - Taxes ........................................................................................................................................................ 11,021.1 11,021.1 108.8 13.6 11,143.5
    - Taxes on income, profits, and capital gains ......................................................... 3,502.7 3,502.7 35.4 3,538.1
    - Taxes on goods and services .................................................................................. 6,130.3 6,130.3 67.1 6,197.4
  - Grants ....................................................................................................................................................... 12,200.0 12,200.0 370.6 12,570.6
  - Other revenue ............................................................................................................... 1,512.7 1,512.7 58.3 13.6 1,584.6
    - Property income ...................................................................................................... 237.4 237.4 0.6 6.4 244.4
    - Withdrawals of income from quasi-corporations ............................................................ 52.0 0.0 52.0 0.0 52.0
- Expense (Table 2) — key lines:
  - EXPENSE ........................................................................................................................ 19,496.0 19,496.0 462.1 34.2 19,992.2
  - Compensation of employees ...................................................................................... 3,512.9 0.0 3,512.9 173.9 19.1 0.0 3,705.9
  - Use of goods and services ........................................................................................... 10,883.6 10,883.6 229.3 10.0 11,122.9
  - Interest .......................................................................................................................... 588.4 588.4 0.0 588.4
  - Social benefits .............................................................................................................. 3,030.8 0.0 3,030.8 32.1 0.9 0.0 3,063.8
  - Consumption of fixed capital ..................................................................................... 0.0 0.0 0.0 0.0 0.0
- Net Transactions in Assets and Liabilities (Table 3) — key lines:
  - 3 NET TRANSACTIONS IN ASSETS AND LIABILITIES .................................................. 4,687.7 4,687.7 76.8 -6.9 4,757.6
  - 31 Net/gross investment in nonfinancial assets ........................................................... 5,758.7 0.0 5,758.7 76.8 -6.9 0.0 5,828.6
    - Valuables ................................................................................................................... 4,747.8 0.0 4,747.8 53.4 0.0 4,801.2
  - 32 Net acquisition of financial assets ............................................................................. 57.0 57.0 57.0
    - Currency and deposits [3212+3222] ......................................................................................... 1,396.2 1,396.2 1,396.2
    - Loans [3214+3224] .......................................................................................................................... -396.2 -396.2 -396.2
    - Equity and investment fund shares [3215+3225] ................................................................. -943.0 -943.0 -943.0
  - 33 Net incurrence of liabilities ........................................................................................ 1,128.0 1,128.0 1,128.0
    - Debt securities [3313+3323] ........................................................................................................ 1,128.0 1,128.0 1,128.0
  - 3M2 Net transactions in financial assets and liabilities [=32-33] ................................ -1,071.0 -1,071.0 -1,071.0

*Source: 1azeea2022001 - 1. Priority Recommendations (REPUBLIC OF AZERBAIJAN, INTERNATIONAL MONETARY FUND).*

### 1. Priority Recommendations _______________________________________________________________________ 5

### 1. Priority Recommendations

### Summary of mission outcomes and priority recommendations
- Mission context:
  - CCAMTAC launched in February 2021; TA missions conducted remotely via Zoom during May 17−21 and July 22−August 4, 2021.
  - Missions conducted by Mr. Roderick O’Mahony (GFS expert) working with staff of the Ministry of Finance’s MTEF Development Center; meetings with SOFAZ, the State Employment Agency, and the State Social Protection Fund.
- Authorities’ stated needs:
  - (a) address and clarify compilation issues arising from annual GFS reported earlier to STA;
  - (b) improve GFS time series data as an input for decision making;
  - (c) strengthen staff capacity for compilation and dissemination of GFS.
- Assessment highlights:
  - Quality of annual GFS for general government is broadly adequate but requires further improvements and clarification of compilation and source-data issues.
  - Need to develop “soft” infrastructure: bridge table between budget codes and GFS codes and a public sector institutional table (PSIT).
  - Need for better coordination between GFS compilers and source data providers.
- Intended benefits:
  - Building high-quality GFS time series (starting annual, with a view to higher frequency) to enhance fiscal policy analysis, budgeting, medium-term forecasting, and fiscal transparency; compiling comprehensive GFS including balance sheet data and PSDS to provide integrated stock-flow presentation.

### Priority recommendations (Table 1)
- October 2021
  - Complete a bridge table between the budget codes and the GFS codes in both Azerbaijani and English.
  - Responsible Institutions: Ministry of Finance, MTEF Development Center
  - Note: The authorities have started working on but not yet completed the action as of end-October 2021. Completing this action might take longer than anticipated at the time of the mission.
- December 2021
  - Complete a public sector institutional table covering all institutional units which belong to general government.
  - Responsible Institutions: Ministry of Finance, MTEF Development Center in collaboration with relevant agencies
- July 2022
  - Establish memoranda of understanding for data sharing between the MTEF Development Center and important source data providers, such as the Public Debt and Financial Liabilities Management Agency.
  - Responsible Institutions: Ministry of Finance, MTEF Development Center

### Context and institutional background
- CCAMTAC role and objectives:
  - Launched February 2021 to deliver practical advice in macroeconomic management and statistics; deepen engagement through awareness of member countries’ institutional, legal, and policy frameworks.
- MTEF Development Center (established 2019) — objectives and responsibilities:
  - Main objective: formulate macro fiscal policy.
  - Other goals: (i) assessing fiscal risks and management; (ii) prioritizing expenditure directions within a multi-resource package based on a sustainable fiscal framework (budget rule); (iii) creating conditions for results-based budgeting and measurable indicators.
  - Responsibilities include approving MTEF preparation guidelines; sending detailed instructions to budget organizations; receiving base forecasts and New Policy Initiatives; sending inquiry letters for annual reports aligned with GFSM 2014; obtaining GFSM 2014–based reports from relevant agencies (State Statistics Committee, SOFAZ, State Social Protection Fund, Unemployment Insurance Fund); summarizing reports and sending them to the IMF.
  - Various macro-fiscal models, stress tests, and scenarios are used for analyses.

### Use of GFS in operations and surveillance
- Authorities provide operational fiscal data for Fund surveillance (state budget and consolidated budget aggregates). GFS reported to STA separately.
- Consolidated budget covers state budget, Nakhchivan Autonomous Republic, State Social Protection Fund, Unemployment Insurance Fund, and SOFAZ.
- Breakdown for the state budget does not follow the GFS economic classification; consolidated budget data include a note on calculations. Only annual data are provided.
- Underlying data were found consistent between GFS and fiscal data for Fund surveillance.
- Issues that could affect surveillance:
  - Treatment of government transfers via the contingency fund (see classification issues).
  - Sectorization of public sector entities (see recommendations to complete PSIT).

### Detailed technical assessment and recommendations — Addressing compilation issues
- Current reporting status:
  - Azerbaijan reports annual GFS for general government covering transaction data (nonfinancial and financial transactions reported; COFOG Table 7 reported). No balance sheet data (Table 6) reported.
  - Institutional coverage specified as: budgetary central government (state budget), extrabudgetary central government (SOFAZ), social security funds (State Social Protection Fund and Unemployment Insurance Fund), state government (Nakhchevan Autonomous Republic), and local government (municipalities).
- Specific classification and compilation issues clarified:
  - Contingency fund of the State budget:
    - (i) Transfer from the PDFLMA to the contingency fund amounting to 396.2 million manat in 2020 would be mostly financial transactions: repayment of loans by public corporations to the PDFLMA which then put the money in the contingency fund. The transfer appeared to include a portion corresponding to payments of interest and fees, which would be classified as revenue for the State budget (nonfinancial transaction); GFS compilers to check with PDFLMA.
    - (ii) Part of the transfer from the Central Bank of Azerbaijan to the contingency fund, totaling 1 billion manat in 2020, would be classified as revenue for the State budget under “withdrawal of income from quasi-corporations” (reflecting 52 million manat reported as entrepreneurial profit by the Central Bank); the remainder (948 million manat) should be recorded as a financial transaction under “withdrawal of equity”.
  - SOFAZ:
    - Purchase of gold bullion by SOFAZ should be recorded as acquisition of nonfinancial assets (valuables); authorities’ classification as nonfinancial assets (valuables) was agreed as correct.
  - Unemployment Insurance Fund:
    - Some cash receipts that were recorded as revenue (collections of previous years’ contributions) should be classified as a financial transaction (change in currency and deposits).
    - Note: The Unemployment Insurance Fund is not covered in the GFS dataset reported by the Azerbaijan authorities. The mission advised that the entity should be included as part of Social Security Funds.
- Compilation outputs:
  - Mission and authorities compiled an initial draft of annual GFS data for 2020 where source data were available (Appendix 1). These figures are initial estimates on a preliminary basis; authorities expected to report annual GFS to STA later when work completed.
- Missing elements and recommended actions:
  - Consumption of fixed capital (CFC) is a key missing element needed to complete Table 2 (Expense) and derive net investment in Table 3; as Azerbaijan reports cash-based GFS, CFC must be estimated using statistical techniques requiring a robust estimate of the stock of nonfinancial assets and depreciation assumptions; authorities agreed to attempt estimation and provide estimated CFC data to the mission.
  - Lack of balance sheet data is an important area for improvement; mission recommended starting with selected parts of the financial balance sheet, particularly debt instruments (debt securities and loans) for which source data are readily available.
  - Completeness of institutional coverage of GG data needs to be established; mission recommended completing a PSIT and reassessing comprehensiveness.

### Detailed technical assessment and recommendations — Building institutional infrastructure
- Current institutional resources:
  - Responsibility for compiling and disseminating GFS assigned to the MTEF Development Center where currently [two] GFS compilers are dedicated to the task; compilers familiar with GFSM 2014.
- Recommended tools and priorities:
  - Bridge table between budgetary codes and GFS codes:
    - Authorities agreed to set up a bridge table; mission recommended high priority and completion by October 2021.
  - Public sector institutional table (PSIT):
    - Authorities agreed to prepare initial draft; mission recommended high priority and completion by December 2021.
  - Database management system:
    - Mission recommended establishing a more robust system for GFS compilation; initial approach could be a set of Excel files for nonfinancial and financial accounts, with an eventual move to an appropriate database system.
- Capacity development:
  - GFS compilers expressed need for sustained capacity development support; mission provided practical implementable recommendations to build institutional infrastructure.

_Italic: Source: 1azeea2022001 - 1. Priority Recommendations (REPUBLIC OF AZERBAIJAN, INTERNATIONAL MONETARY FUND)._

### 18. In the mission’s view, institutional arrangements among the agencies involved in

### 18. In the mission’s view, institutional arrangements among the agencies involved in

### Institutional arrangements and data sharing
- Establish an inter-agency technical working group on GFS and assign responsibilities for data collection and compilation to the relevant agencies.
- Establish memoranda of understanding between the MTEF Development Center and the source data providers, including the Public Debt and Financial Liabilities Management Agency and SOFAZ, who are part of the technical working group.
- Mission recommendation: assign high priority to establishing the memorandum of understanding between the MTEF Development Center and important source data providers, such as the Public Debt and Financial Liabilities Management Agency.
- Target completion date for the memorandum of understanding between the MTEF Development Center and important source data providers: July 2022.
- Rationale: these arrangements would allow for transfer of more timely and comprehensive source data and opportunities to discuss and clarify new types of transactions that may occur occasionally.

### Follow-up and technical assistance
- Priority recommendations mostly relate to building key elements of the institutional infrastructure.
- Authorities could consider requesting follow-up TA missions to address issues arising during implementation.
- Authorities are encouraged to collate necessary information and data on these issues and discuss TA needs with the GFS-PSDS resident advisor at the CCAMTAC.

### Strengthening staff capacity
- Mission provided training sessions covering:
  - Overview of GFS, institutional sectors, and balance sheet data.
  - Demonstration of how Azerbaijan’s actual data fit in the tables in the IMF’s annual GFS database.
- Training participants included source data providers from SOFAZ, the State Employment Fund, and the State Social Protection Fund.
- Outcome: GFS compilers and source data providers were more sensitized on various issues arising from GFS compilation and the need for continuously improving GFS.
- Mission advice on sector classification:
  - Collect information necessary to classify a public sector entity into the appropriate sector and subsector.
  - Sectorization principle: an entity belongs to general government if it is run on a commercial basis as a non-market producer.
  - Apply the “market test”: if the value of sales to individuals and private corporations exceeds 50 percent of the cost of production, the entity is considered commercial (public corporation); otherwise it is a non-market producer (general government).
  - To apply the market test, require information on the amount of revenue received by each public entity by revenue category, with the amount received from other public entities separately identified.
- Continued training needs:
  - Continued training for GFS compilers, especially using actual source data and the questionnaire used for reporting annual GFS, is essential.
  - Training for source data providers to present their data in a GFS-consistent format is useful.
  - Assist source data providers in creating a bridge table to map existing accounting data to a GFS-consistent format to accelerate compilation and ensure accuracy.

### Action plan — summary of key actions, outcomes, and target completion dates (as listed)
- Outcome: Data are compiled and disseminated using the coverage and scope of the latest manual/guide
  - H All institutional units in the general government sector are identified in the public sector institutional table.
    - Target Completion Date: December 31, 2021
  - H Transaction data cover all significant general government units.
    - Target Completion Date: July 31, 2022
  - M Financial balance sheets cover the majority of financial assets and liabilities for all significant general government units
    - Target Completion Date: December 31, 2022
- Outcome: Data are compiled and disseminated using the concepts and definitions of the latest manual/guide
  - H A bridge table between the budget codes and the GFS codes is completed both in Azerbaijani and English.
    - Target Completion Date: October 30, 2021
  - H PSDS for budgetary central government covering loans and debt securities are compiled.
    - Target Completion Date: April 30, 2022
  - M PSDS for general government covering loans and debt securities are compiled.
    - Target Completion Date: December 31, 2022
  - H GFS for budgetary central government covering transactions are compiled using the GFSM 2014 framework, concepts, and definitions.
    - Target Completion Date: April 30, 2022
  - H GFS for budgetary central government covering financial balance sheets are compiled using the GFSM 2014 framework, concepts, and definitions.
    - Target Completion Date: December 31, 2022
  - M GFS for general government covering transactions are compiled using the GFSM 2014 framework, concepts, and definitions.
    - Target Completion Date: July 31, 2022
  - M GFS for general government covering financial balance sheets are compiled using the GFSM 2014 framework, concepts, and definitions.
    - Target Completion Date: December 31, 2022
- Outcome: Legal/institutional environment, existing statistics, management processes, institutional integrity/transparency/ethical practices and statistical leadership/strategic planning are conducive to compile and disseminate statistics
  - Outcome indicator: Institutional responsibility for collecting, processing, and disseminating statistics is clearly specified and data sharing and coordination among data-producing agencies are adequate.
  - H An inter-agency technical working group on GFS is established and responsibilities are assigned for data collection and compilation to the relevant agencies.
    - Target Completion Date: October 31, 2021
  - H Memoranda of understanding are established for data sharing between the MTEF Development Center and the important source data providers.
    - Target Completion Date: July 31, 2022

### Officials met during the mission
- Mr. Ilham Karimov — Director, MTEF Development Center, MOF
- Mr. Rashad Hasanov — Deputy Director, MTEF Development Center, MOF
- Ms. Gunel Aliyeva — Leading Specialist, MTEF Development Center, MOF
- Ms. Sevinc Eliyeva — Specialist, MTEF Development Center, MOF
- Ulker Gadirova — Chief Specialist, International Corporation Department, MOF
- Aydan Vuset — Chief Specialist, International Corporation Department, MOF
- Mr. Kamal Qasimov — Leading Specialist, MTEF Development Center, MOF
- Ilkin Rahimov — Chief Specialist, Finance Department, State Employment Agency
- Dinara Pashayeva — Chief Specialist, Finance Department, State Employment Agency
- Farid Orujov — Leading Advisor, Accounting Department, SOFAZ
- Konul Javadova — Senior Analyst, Risk Management Division, SOFAZ
- Emin Alirzayev — Deputy Director, Finance Department, State Social Protection Fund

*Content unit: 1azeea2022001 - 18. In the mission’s view, institutional arrangements among the agencies involved in*

### APPENDIX I. PRELIMINARY ANNUAL GFS DATA FOR 2020

### APPENDIX I. PRELIMINARY ANNUAL GFS DATA FOR 2020

### Revenue (Table 1)
- REVENUE ....................................................................................................................... 24,733.8 24,733.8 537.7 27.2 25,298.7
- Taxes ........................................................................................................................................................ 11,021.1 11,021.1 108.8 13.6 11,143.5
  - Taxes on income, profits, and capital gains ......................................................... 3,502.7 3,502.7 35.4 3,538.1
    - Payable by individuals ............................................................................................................... 1,151.0 0.0 1,151.0 32.5 0.0 1,183.5
    - Payable by corporations and other enterprises ............................................................... 2,351.7 0.0 2,351.7 2.9 0.0 2,354.6
  - Taxes on property .................................................................................................... 227.6 227.6 1.0 13.6 242.2
    - Recurrent taxes on immovable property ............................................................................ 227.6 227.6 1.0 13.6 242.2
  - Taxes on goods and services .................................................................................. 6,130.3 6,130.3 67.1 6,197.4
    - General taxes on goods and services .................................................................................. 5,127.2 5,127.2 46.1 5,173.3
      - Value-added taxes ................................................................................................................. 4,818.3 4,818.3 42.0 4,860.3
      - Sales taxes ................................................................................................................................ 308.9 308.9 4.1 313.0
    - Excises ............................................................................................................................................. 898.2 898.2 20.3 918.5
    - Taxes on use of goods and on permission to use goods or perform activities .... 104.9 104.9 0.7 105.6
      - Motor vehicles taxes ............................................................................................................. 104.9 104.9 0.7 105.6
  - Taxes on international trade and transactions .................................................... 1,160.5 1,160.5 5.3 1,165.8
    - Customs and other import duties ........................................................................................ 1,007.2 1,007.2 5.3 1,012.5
    - Taxes on exports ......................................................................................................................... 3.2 3.2 3.2
    - Other taxes on international trade and transactions ...................................................... 150.1 150.1 0.0 150.1
- Social contributions ..................................................................................................... 0.0 0.0
- Grants ....................................................................................................................................................... 12,200.0 12,200.0 370.6 12,570.6
  - From other general government units .................................................................. 12,200.0 12,200.0 370.6 12,570.6
    - Current ............................................................................................................................................ 12,200.0 12,200.0 370.6 12,570.6
- Other revenue ............................................................................................................... 1,512.7 1,512.7 58.3 13.6 1,584.6
  - Property income ...................................................................................................... 237.4 237.4 0.6 6.4 244.4
    - Interest ............................................................................................................................................ 37.7 37.7 37.7
      - From nonresidents ............................................................................................................... 1.7 0.0 1.7 0.0 1.7
      - From residents other than general government ......................................................... 20.5 0.0 20.5 0.0 20.5
      - From other general government units ........................................................................... 15.5 15.5 15.5
    - Dividends ....................................................................................................................................... 1.2 1.2 1.2
    - Withdrawals of income from quasi-corporations ............................................................ 52.0 0.0 52.0 0.0 52.0
    - Rent ................................................................................................................................................. 146.5 146.5 0.6 6.4 153.5
  - Sales of goods and services .................................................................................... 639.9 639.9 5.6 1.0 646.5
    - Administrative fees ..................................................................................................................... 149.0 149.0 4.1 1.0 154.1
    - Incidental sales by nonmarket establishments ................................................................. 490.9 490.9 1.5 492.4
  - Fines, penalties, and forfeits ................................................................................... 635.4 635.4 2.2 637.6
  - Transfers not elsewhere classified ......................................................................... 0.0 0.0 49.9 6.2 56.1
    - Current ............................................................................................................................................ 0.0 0.0 49.9 6.2 56.1

### Expense (Table 2)
- EXPENSE ........................................................................................................................ 19,496.0 19,496.0 462.1 34.2 19,992.2
- Compensation of employees ...................................................................................... 3,512.9 0.0 3,512.9 173.9 19.1 0.0 3,705.9
  - Wages and salaries .......................................................................................................................... 2,906.5 0.0 2,906.5 141.8 15.1 0.0 3,063.4
  - Employers' social contributions .................................................................................................. 606.4 0.0 606.4 32.1 4.0 0.0 642.5
    - Actual employers’social contributions ................................................................................. 606.4 0.0 606.4 32.1 4.0 0.0 642.5
- Use of goods and services ........................................................................................... 10,883.6 10,883.6 229.3 10.0 11,122.9
- Consumption of fixed capital ..................................................................................... 0.0 0.0 0.0 0.0 0.0
- Interest .......................................................................................................................... 588.4 588.4 0.0 588.4
  - To nonresidents ................................................................................................................................ 468.4 0.0 468.4 0.0 0.0 468.4
  - To residents other than general government ........................................................................ 120.0 0.0 120.0 0.0 120.0
- Subsidies ....................................................................................................................... 1,078.8 1,078.8 26.0 1,104.8
  - To public corporations ................................................................................................................... 418.6 0.0 418.6 7.0 0.0 425.6
  - To private enterprises ..................................................................................................................... 660.2 0.0 660.2 19.0 0.0 679.2
- Grants ............................................................................................................................ 401.5 401.5 0.8 402.3
  - To international organizations .................................................................................................... 22.7 0.0 22.7 0.0 22.7
  - To other general government units .......................................................................................... 378.8 378.8 0.8 379.6
    - Current ............................................................................................................................................ 378.8 378.8 0.8 379.6
- Social benefits .............................................................................................................. 3,030.8 0.0 3,030.8 32.1 0.9 0.0 3,063.8
  - Social security benefits ................................................................................................................... 1,214.7 0.0 1,214.7 0.3 0.0 1,215.0
  - Social assistance benefits .............................................................................................................. 1,806.1 0.0 1,806.1 31.7 0.9 0.0 1,838.7
  - Employment-related social benefits .......................................................................................... 10.0 0.0 10.0 0.0 10.0
- Other expense .............................................................................................................. 4.2 4.2
  - Transfers not elsewhere classified .............................................................................................. 0.0 4.2 0.0 4.2
    - Current ............................................................................................................................................ 0.0 3.6 0.0 3.6
    - Capital ............................................................................................................................................. 0.0 0.6 0.0 0.6

### Net Transactions in Assets and Liabilities (Table 3)
- 3 NET TRANSACTIONS IN ASSETS AND LIABILITIES .................................................. 4,687.7 4,687.7 76.8 -6.9 4,757.6
- 31 Net/gross investment in nonfinancial assets ........................................................... 5,758.7 0.0 5,758.7 76.8 -6.9 0.0 5,828.6
  - Fixed assets ............................................................................................................... 891.8 0.0 891.8 23.3 -6.9 0.0 908.2
    - Buildings and structures ........................................................................................................... 823.7 0.0 823.7 22.5 -7.0 0.0 839.2
    - Machinery and equipment ...................................................................................................... 34.8 0.0 34.8 0.7 0.0 35.5
    - Other fixed assets ....................................................................................................................... 33.3 0.0 33.3 0.1 0.1 0.0 33.5
  - Inventories ................................................................................................................ 90.8 0.0 90.8 0.0 90.8
  - Valuables ................................................................................................................... 4,747.8 0.0 4,747.8 53.4 0.0 4,801.2
  - Nonproduced assets ................................................................................................ 28.3 0.0 28.3 0.1 0.0 28.4
    - Intangible nonproduced assets ............................................................................................. 28.2 0.0 28.2 0.1 0.0 28.3
- 32 Net acquisition of financial assets ............................................................................. 57.0 57.0 57.0
  - Currency and deposits [3212+3222] ......................................................................................... 1,396.2 1,396.2 1,396.2
  - Loans [3214+3224] .......................................................................................................................... -396.2 -396.2 -396.2
  - Equity and investment fund shares [3215+3225] ................................................................. -943.0 -943.0 -943.0
  - Domestic debtors ..................................................................................................... 52.0 52.0 52.0
  - External debtors ....................................................................................................... 5.0 0.0 5.0 0.0 5.0
- 33 Net incurrence of liabilities ........................................................................................ 1,128.0 1,128.0 1,128.0
  - Debt securities [3313+3323] ........................................................................................................ 1,128.0 1,128.0 1,128.0
  - Domestic creditors ................................................................................................... 5.0 5.0 5.0
  - External creditors ..................................................................................................... 1,123.0 0.0 1,123.0 0.0 1,123.0
- 3M2 Net transactions in financial assets and liabilities [=32-33] ................................ -1,071.0 -1,071.0 -1,071.0
- 3M3 D1 debt liabilities at market value: transactions (= 3303+3304) ................................. 1,128.0 1,128.0 1,128.0

*Source: APPENDIX I. PRELIMINARY ANNUAL GFS DATA FOR 2020 (Republic of Azerbaijan), GFSM2014_V1.7912.*

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_Source: https://www.imf.org/-/media/files/publications/cr/2022/english/1azeea2022001.pdf_