BAKU, Azerbaijan, February 17. The result-based
budget system hasn't yet been fully institutionalized in Azerbaijan
despite the ongoing application of the Medium Term Expenditure
Framework (MTEF) and the result-based budget mechanism in the
country, Trend
reports via the State Audit journal of the Chamber of Accounts for
2025.
According to the journal, two parallel budget planning models
are currently operating in the country. One of them is the
order-based budget regulated by the law "On the budget system", and
the other is the results-based budget model based on the MTEF
rules. The journal noted that this parallelism complicates forming
a unified and consistent approach in the budget process.
The assessment of the Chamber of Accounts indicates that the
integration between the goals set in strategic documents and the
planning of budget expenditures is weak. At the same time, since
the methodological framework for result indicators hasn't been
fully formed, the effective application of the results-based budget
mechanism is limited.
The chamber emphasized that ensuring fiscal discipline requires
strengthening fiscal responsibility in all processes of public
finance management, from the budget preparation stage to the
application and reporting stages. Fiscal responsibility is
considered the main mission of the Supreme Audit Institutions, and
in Azerbaijan, this function is performed by the Chamber of
Accounts.
Moreover, the chamber noted that the prerequisite for fiscal
discipline is the establishment of appropriate institutions and
regulatory mechanisms for public finance control. In this context,
the application of budget rules at the macro-fiscal level is of
particular importance. Fiscal rules cover not only quantitative
indicators, but also procedural approaches.
In this regard, the application of the MTEF and activity
budgeting or result-based budgeting institutions at the planning
stage, which forms the basis of budget processes, is assessed as
one of the main conditions for a more economical, efficient, and
result-oriented use of public funds. The Chamber of Accounts, as
the supreme audit institution, acts as an active initiator of the
application of these institutions in the country.
At the same time, the chamber noted that the effective
functioning of the results-based budget system further enhances the
role of efficiency (performance) audit. This type of audit allows
assessing the economy, efficiency, and effectiveness of programs,
projects, activities, management, and information systems. Although
the general methodological approaches to performance auditing
currently applied by supreme audit institutions in most countries
of the world are similar, the forms of application of this audit
differ in individual countries and organizations.
According to the Chamber of Accounts, the full formation of the
MTEF and result-based budget institutions can significantly
contribute to reducing fiscal risks, increasing the effectiveness
of budget expenditures, and strengthening transparency in public
financial management.
