EFFECTIVE FINANCING

Over its 20 years of independence, Azerbaijan has negotiated a difficult path from being a poor country torn by internal conflict and war to a stable country with a rapidly developing economy and independent foreign policy. Financial, technological and advisory support from international financial institutions, particularly the World Bank, played a crucial role in these achievements. The World Bank started cooperation with Azerbaijan in 1992, during its most difficult period. To this day, the World Bank continues to support the implementation of important projects in various spheres of Azerbaijan's economic and social life. Over these years it has sponsored 54 projects with over 3 billion dollars. 
Larisa Leshchenko, the World Bank country director for Azerbaijan, spoke with R+ about how the World Bank's activities have benefited Azerbaijan.

- The World Bank has carried out important work in various spheres of Azerbaijan's socio-economic life. Are there any statistics on which segment of the population, World Bank projects have benefited the most? How many people have derived direct benefit and how many indirectly?

- It is extremely important for the World Bank to know that as many Azerbaijani citizens as possible are fully aware of the positive results of our activities, including lending, technical support and analytical work. I can say that we have a reason to be proud because many of our projects have seen great success and, as a result, very many people got help. By rough estimates, thanks to World Bank projects, about 1.2m people are now using better roads. Not only has this improved the quality of their everyday life but is very important for the development of the economy. Entrepreneurs do not experience difficulties with the transport of products, thereby improving the business environment. This has also led to more income for people.
In addition, about 180,000-20,000 people in Azerbaijani districts have gained access to quality water in their homes. Currently, the Bank is continuing to implement additional projects in these areas so these figures will significantly increase after their completion. 
About 50,000 farmers used the credit we offered them as part of various World Bank projects. Thanks to these loans, the farmers managed to expand their businesses and increase their incomes. Our research shows that limited access to financial resources is one of the major obstacles for business development, including in the agricultural industry. The World Bank continues to work in this direction.
We also work in healthcare. As many as 200,000 people gained access to better quality services. Let me say that thanks to World Bank projects in healthcare, new hospitals in Saki and Agdas now serve many people who used to travel to Baku to receive medical services. 
In addition, over 8,000 teachers were trained in new methods. The programme of assistance to internally displaced persons which encompasses about 200,000 people is another important project. Our second project on this issue, which is being implemented now, envisages providing help to IDPs to help them expand their business activities. It is important to ensure that IDPs are not dependent on social assistance but have their own businesses. Another noteworthy direction in our work in Azerbaijan is the assistance we are giving to the government in modernizing the judicial system and improving access to and the quality of services in this sector.

- Which of your projects do you think have been the most successful?

- I personally like projects that focus on the development of rural infrastructure and the improvement of the quality of community life. The Azerbaijani Rural Investments project is a good example of such cooperation. We will continue this project, which is aimed at providing support to the development of rural infrastructure. If we compare villages in which this project is being implemented with others, we can see a huge difference. These villages are open to innovations and are seeking solutions to their problems and ways of mobilizing their internal and external resources for the resolution of common problems. Therefore, I think this is a successful project. 
In addition, we have achieved great success in the implementation of the projects I mentioned before, which aim to improve the life of internally displaced persons. As part of the second project which was launched only two years ago, the significant resources that were allocated to support and develop entrepreneurship among IDPs have already been used. This is an indication of the high demand for such projects. 
There is also a project focussed on the management of domestic solid waste which is rather unique for the World Bank. There are projects which are not well publicized yet indirectly affect large numbers of people. One of such projects aims at improving accountability in the budget and corporate sectors. As part of this project, the World Bank helps Azerbaijan create a system of more efficient use of budget resources. Transparency in budget use will encourage the responsible use of state resources. 
We have another important project on improving the population's social welfare which aims to improve the mechanism of allocating subsistence allowances. Thanks to this project, subsistence allowance is allocated in accordance with specific criteria so it is only targeted at those who actually need this help. The fact that a number of other countries have expressed a desire to copy Azerbaijan's experience is proof of the success of this project. For example, Moldova, which is now introducing a similar system of paying subsistence allowance, is carefully studying Azerbaijan's experience.

- How do you assess the situation regarding the use of funds allocated to various projects in Azerbaijan? What is the situation in other partner countries in this respect? Which projects have experienced delays and why?

- Those who do nothing, do not make mistakes. We are doing a great amount of work in Azerbaijan and, naturally, we encounter problems during the implementation of various projects. However, the important thing is to identify a problem as soon as possible and address it. We had delays in the use of funds allocated to projects related to water supplies and sewage, the modernization of the railways and the judicial system. However, after we introduced a number of amendments and restructured the projects, most of these problems disappeared. 
Most importantly, the 22 per cent disbursement rate in Azerbaijan is one of the best in the region. Over the past fiscal year which ended at the end of June, the disbursement rate reached 22.4 per cent. Last year the indicator was 13.8 per cent and the year before - 8 per cent. We can see huge progress. In fact, if the disbursement rate reaches 20-25 per cent this is considered a very good result. 

- Has the World Bank already defined areas of cooperation with the government for the remaining period of its current strategy? In which areas can we expect the investment of additional funds?

- Currently we are in a transitional stage between the current strategy which expires at the end of next year, and the future strategy. As for the plans for the final year of the strategy, we intend to continue work in the areas that have proved successful. These include infrastructure, especially the renovation and construction of roads and water supplies. We can see the need for additional financing and the construction of new roads. We want to build on the results we have achieved so far in this sector. 
In addition, the Bank has now started preparing a new project on judicial reform. The project will focus on issues that are primarily related to the institutional development of the system. This includes the introduction of new procedures, new approaches, the introduction of more information technologies in court and the provision of overall better quality judicial services, as well as, most importantly, an expansion of capacity for the settling of economic disputes. Currently we are undergoing internal preparations and the preliminary assessment of the project will take place in November. The assessment will reveal the volumes of necessary work and the funds required, as well as the timeframes of the project's implementation. I think the World Bank will be able to approve the project by the end of March 2014. 
In parallel, we are considering new areas of cooperation and will start discussions on these as part of the preparations for our new strategy. 

- When will the World Bank start preparations for the new strategy of work in Azerbaijan? What areas of cooperation will the document cover?

- In November-December we plan to start consultations, the results of which will lay the foundation for the new strategy. The document will be widely discussed, both with the government and the general public, in Baku, as well as in the regions. 
The strategy will reflect our traditional focus issues, such as the development of infrastructure, the social sphere, as well as absolutely new projects. This includes the development of the tourist industry and the use of alternative energy sources. If need be, the World Bank is prepared to cooperate in these areas. While our previous education-related projects mainly focused on school education, now we are thinking of preparing a project on the reform of professional-technical higher education, which should respond to the requirements of the market economy. We are prepared to help the government reform the system of financing healthcare. 
In addition, the Bank discussed the possibility of participation in a project that aims to expand the activities of the ASAN Service - the state agency for public service and social innovations under the president of Azerbaijan. The work of this agency has had a very good effect. Citizens who turn to this agency receive high-quality services at a low cost. We are prepared to assist this agency in building new offices in the regions and improving its programme support as well as helping it to expand the list of services offered. Most importantly, this envisages expanding the area of coverage of this service to ensure that every Azerbaijani citizen has access to quality and efficient government services. 
We aim to complete work on the new strategy within a year. Next October we will be able to propose a draft document for consideration at the Bank's Board of Directors.