Our Analytics 2 april — 15:06

Azerbaijan emerges from 'shadow' (Topical)



The share of the 'shadow economy' in Azerbaijan is decreasing. And this is not a statement by officials, which can be taken for another propaganda ploy, as the enemies of the country often accuse. No, this data is published in the report of the International Monetary Fund (IMF) 'Shadow Economies Around the World: What Did We Learn Over the Last 20 Years?' Not even the most vicious enemies has any reason to distrust it.

And the IMF told us very interesting information. The average index of the 'shadow economy' in the country in 1991-2015 was 52.19%. Frankly, this figure can discourage not only lay persons: more than half of the country's economy 'hides in the shadows,' that is, it exists, but at the same time as if it doesn't. True, this does not mean that more than half of the economy, as in the Soviet years, consists of illicit shops and entire factories that are not listed anywhere.

Now there are different times, the country has a clear order, in which it is simply impossible to hide the presence of even small objects from the relevant structures. But to understate the volume of production, distort its value, not to formalise labour contracts, or to give out one sum in the form of salary, but to formally draw up another sum: all these and other violations are widespread. And the relevant bodies are fighting with this evil. But in any case, the share of 'shadow economy' in the country is prohibitively high. And somehow one cannot believe that the government, which has recently launched an uncompromising struggle against any violations in the economic sphere, can allow this.

Indeed, the data of the IMF, as the reader has probably managed to notice, is noticeably outdated. It should be noted that IMF conducted its studies not only in Azerbaijan, they covered 158 countries. At the same time, the share of 'shadow economy' in Azerbaijan in 1991 was 54.69%. The maximum value of this indicator was noted in 1994 (64.66%). But in 2014 it fell to 42.15%, which is the minimum for the 25-year study period. However, in 2015 this indicator has again grown up to 43.66%. Unfortunately, the IMF studies do not cover the last two years, although the tendency to improve this indicator is visible to the naked eye.

In addition, the reader is also well aware that the true value of dry statistics is better known in comparison. Here, it seems, would be appropriate to compare our indicators with the achievements of neighbouring Georgia, which directs all its efforts to integrate with the West and achieved significant successes in this direction.

Our opposition often replicates with envy the 'Georgian example.' What are the successes of this country in this area? It turns out that in 1991-2015 the average indicator of the 'shadow economy' in Georgia was 64.87%, and in 2015 - 53.07%. That is, the level of the 'shadow economy' in unambiguously pro-Western Georgia significantly exceeds the Azerbaijani indices both on average for 25 years and for the last year covered by the study. Of course, Azerbaijan is far away, say, from Switzerland, where these figures were 7.24% and 6.94% respectively, but we are already approaching the level of the 'shadow economy' in Kazakhstan and Russia.

But it was only in October of last year that Azerbaijani President Ilham Aliyev signed an order approving the 'Plan of Measures to Curb Unofficial Employment in Azerbaijan.' As can be seen from the title of the decree, it covers precisely those spheres, which we mentioned above as the main factors affecting the level of the 'shadow economy.'

Not much time has passed, and it is too early to draw any concrete conclusions. But the measures taken after this allow us to confidently say that already this year we will be able to overtake many countries in this indicator. And this is necessary not only for the sake of a tick, but promises to bring additional millions to the budget.

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