In an apparent effort to quell public anger over Azerbaijan’s economic woes, the government in Baku on Jan. 15 exempted wheat imports and bread sales from value-added tax, according to reports by Reuters.
The wholesale price of flour in the oil-rich (oil – which accounts for 94 percent of the exports of the nation and 73 percent of the budget) Caspian nation has been cut to AZN 21.5-22.5 ($13.74-14.37) for a 50-kilogram sack, with retail prices being from AZN 23-24 ($14.69-15.33), according to the Ministry of Economy and Industry of Azerbaijan.
The price of bread has been cut accordingly, to AZN 0.30 ($0.15) for a 500-gram loaf, and AZN 0.40 ($0.27) for a 700-gram loaf.
While the move is probably intended by the government to stave off criticism from the Azerbaijani public, which has been hit hard by a currency crisis brought on by the sharp fall in the price of oil, some experts criticized the move as economic interference.
“It’s surprising that the state took step without doing any serious research,” said Azerbaijani agriculture expert Vahid Maharramov on independent news channel Meydan TV. He said the state should have taken into account the price of grain imports, transportation, production costs and the financial states of bread companies.
“If the state wants to change the price in this field, the market has to be researched. Otherwise, the government is violating the rights of entrepreneurs,” Maharramov said.
He said the bread industry in Azerbaijan was also under monopoly control, and expressed doubts that the government would be able to keep the lid on bread prices for long.
“The state has done nothing to resolve this problem (of monopolization of bread production). That’s why I don’t think that the exemption from VAT will keep the price of bread at this level. The reason is that the country completely depends on imports of grain, and there is a huge monopoly system,” Maharramov said.
There are also doubts that the government’s price-setting decree is lawful. According to lawyer Alaif Hasanov, only the country’s legislative bodies have the right to approve these types of measures: “According to new laws, a decision on VAT exemptions can only be taken by the legislative bodies,” Hasanov said. “The state should not be administrated by verbal instructions – this is nonsense!”
Crackdown in the regions
Meanwhile, the government has again deployed riot police to quash protests in the regions – this time in the city of Guba, in northeast Azerbaijan, according to reports in local media.
Guba residents gathered in the city’s central street to protest against price hikes and high unemployment. Protesters complained that because of unemployment, they are not able to obtain bank loans, and they are not receiving social aid payments.
Riot police were reported to have used tear gas and water cannons to disperse the demonstration.
A bomb threat was also made against a mosque in Guba on Jan. 15, according to a report by the Azeri service of Radio Free Europe/Radio Liberty.
Friday prayers at the mosque were cancelled as police searched the building, but no explosives were found, Radio Liberty reported.
Kyiv Post intern Gulnar Salimova can be reached at [email protected]
