Azerbaijan to provide one-off financial assistance to pensioners
Azerbaijani pensioners to receive one-off financial assistance
The President of Azerbaijan ordered to give all labor pensioners in the country one-time financial assistance in the amount of 200 manats [$117.6]. This amount will be divided into four parts, and pensioners will receive it in equal parts every three months. According to experts, this step is due to the expected large surplus of the state budget, as well as the rapid rise in prices.
- Anti-tobacco measures in Armenia – no more cigarettes in shop windows anymore
- What caused the collapse of Turkish lira – political or economic reasons?
Azerbaijani President Ilham Aliyev signed an order “On additional measures in the field of social protection of labor pensioners”. According to the document, all labor pensioners registered as of January 1, 2022, will receive an amount of 200 manats [$117.6] from the state in four equal installments during the current year.
The same order provides for the indexation of the insurance part of pensions and pension capital.
The minimum pension in Azerbaijan was raised by 20% at the beginning of 2022. In 2021, the minimum pension in the country was 200 manats [$117.6], and since January 1, 2022, it has increased to 240 manats [$141.2].
Experts are unanimous in their opinion that the decision on the lump-sum payment of pension supplements is due to the expected large surplus of the state budget. Thus, in the state budget of Azerbaijan for 2022, the price of 1 barrel of oil is set at $50. At present, the price of Azerbaijani oil in the world markets is approaching $100. Proceeds from the sale of oil occupy a significant part of the revenues in the state budget of Azerbaijan.
Another reason cited for the lump sum payment is the rapid rise in prices for essential goods. In January 2022, the price of bread in Azerbaijan rose by 30%.
Expert commentary
According to Natik Jafarli, an economist and one of the leaders of the Republican Alternative opposition party, until 2016, the indexation of wages and pensions in Azerbaijan was carried out based on the annual inflation rate:
“A series of devaluations in 2015 caused a serious increase in inflation, and in 2016 an inflation rate of 12.1% was officially announced. After that, the government changed the formula for calculating indexation. Since 2916, it has been carried out in accordance with the growth of the annual nominal profit, the growth of wages. The goal was to reduce payments for indexation to the population. In other words, the government wanted to save money on payments because the growth of nominal profit annually did not exceed 3%”.
Commenting on the decision on the indexation of pensions and a one-time payment to labor pensioners, Jafarli noted:
“Indexation will be 3.4%. In other words, if a person received a pension of 300 manats [$176.5], now he will receive 310.2 manats [$182.5]. But they see that this is no longer good, prices are rising faster, people’s expectations were different. Therefore, they decided to distribute 200 manats [$117.6] to pensioners. But even this amount they will not pay fully at once but will divide it into four installments.
The question is, why not include this amount as a surcharge to the amount of indexation? The answer is simple: if such an approach is legalized, then this additional payment will have to be made next year as well. And therefore, this is not done in the form of a change in the law, but simply as an order of the president. This benefits his authority, as pensioners will know that the addition to their pensions depends solely on the will of the president. But in fact, this should be regulated by laws, and not by the will of one person”.
