Financial System of Azerbaijan
Overview of Key Components
The financial system of Azerbaijan consists of several key components, including:
- Banks: Commercial and investment banks, with some being state-owned and others privately owned. The largest bank in the country is the International Bank of Azerbaijan.
- Central Bank of Azerbaijan: Responsible for implementing monetary policy and regulating the banking system.
- Financial Market Supervisory Authority (FIMSA): Licenses and supervises securities markets, investment funds, insurance companies, and other non-banking financial institutions.
Banking Sector
The banking sector in Azerbaijan is made up of a number of commercial and investment banks. The largest bank in the country is the International Bank of Azerbaijan, which was established in 1992. The Central Bank of Azerbaijan has taken steps to strengthen the financial sector and reduce risks by increasing capital requirements for banks and introducing stricter regulations on lending.
Financial Market Supervisory Authority (FIMSA)
FIMSA aims to develop a stable, efficient and competitive financial market that protects investors’ rights and interests. It is responsible for licensing and supervising securities markets, investment funds, insurance companies, and other non-banking financial institutions in Azerbaijan.
Investment Policy
Investment policy in Azerbaijan focuses on promoting the country as an attractive destination for foreign direct investments. The government aims to stimulate economic growth by creating a favorable investment climate through various measures such as tax incentives, simplified registration procedures, and a comprehensive system of guarantees for foreign investors.
Main Objectives of Financial Policy
The main objectives of the financial policy of the state are:
- Ensure stability of national currency: Maintain a stable exchange rate.
- Balance of payments: Ensure that the country’s foreign trade is in balance.
- Financial equilibrium: Maintain a balance between government revenue and expenditure.
- Increase role of domestic capital: Encourage domestic investment and reduce reliance on foreign capital.
- Effective use of savings: Ensure that the population’s savings are used effectively to stimulate economic growth.
Tax System
The tax system in Azerbaijan is based on a combination of direct and indirect taxes. Direct taxes are levied on individuals and legal entities, while indirect taxes are levied on goods and services. The main source of revenue for the state budget is the oil tax.
Tax Policy
The Ministry of Taxes aims to create a stable, favorable tax environment that encourages entrepreneurship, investment and economic growth.