MUTUAL INTEREST

"Nothing personal, only business". This popular expression best describes the economic relationship in the modern world. Respect for mutual interests and benefits is the core of business "friendship" at any level of economic relations. At the same time, if it is still a "friendship", it also means assistance and support, which is also necessarily mutual.

The independent Azerbaijan has built up its relations with major international financial institutions, including the World Bank using a similar approach. For a quarter of a century, mutual friendship does not fail and almost completely suits both sides, otherwise the 25th anniversary of cooperation would not be celebrated as solemnly as it was done recently in Baku with the participation of top government and WB officials.

Mutual gratitude

It seems that the main guarantee of the success of the relations between Azerbaijan and the World Bank is the same mutual relationship. The bank has greatly supported the country during the first years of independence, and even now, the projects being implemented are very important, but Azerbaijan does not disappoint its partners. Cyril Muller, Regional Vice-President of World Bank (WB) for Europe and Central Asia, said in his speech in Baku that for 25 years Azerbaijan has demonstrated the greatest regional growth. Most importantly, during this period the poverty level in the country fell below 10%. "WB is proud that it can be a part of Azerbaijan’s success achieved in 25 years," said C. Muller.

This is obvious at least because the total amount of funds allocated by the World Bank for Azerbaijan has reached $3.5 billion for a quarter of a century, which supported more than 50 finished and still ongoing projects. Currently, WB is implementing 10 projects in Azerbaijan totaling $1.4 billion. The International Finance Corporation (IFC), which is also a member of the WB group, provided loans to Azerbaijan totaling $470 million for the implementation of 56 projects.

According to the chairman of the Central Bank of Azerbaijan Elman Rustamov, WB portfolio in Azerbaijan is one of the largest among the CIS countries. The Minister of Economy of Azerbaijan, Shahin Mustafayev, added that the cooperation with international institutions such as the World Bank has greatly helped Azerbaijan to switch to liberal market economy.

However, we must acknowledge that Azerbaijan maintains smooth relations not with all IFIs, and sometimes information on problems seeps into the press. But for the sake of justice, we note that there were no "high-profile" complaints with the World Bank between the parties, perhaps only working moments that were settled through negotiations. According to the Vice Premier of Azerbaijan, chairman of the State Committee for Refugees and IDPs Ali Hasanov, perhaps that was possible because over the years of cooperation, the government has not worked with any unprofessional WB staff, all missions consisted of specialists and real professionals. Thanks to this, effective cooperation mechanisms were developed between the parties, which the World Bank could subsequently use in other countries.

By the way, the mutual satisfaction of the WB and Azerbaijan with such a long friendship was proved by the presentation of a new postal stamp dedicated to the 25th anniversary of cooperation.

Billion-dollar assistance

Why the friendship with the World Bank is so valuable for Azerbaijan? The most important thing is that during the difficult times for Azerbaijan, the bank supported the socially vital projects, which required considerable funds. For example, thanks to WB support, such cultural monuments as the Shirvanshahs Palace, Khan Palace in Sheki, Momine Khatun and Garabagh mausoleums in Nakhchivan have been restored.

In addition, since the beginning of cooperation, the WB has allocated up to $170 million for projects related to IDPs and refugees in Azerbaijan, which includes 910 infrastructure microprojects. In addition, the World Bank supported educational programs by assisting in the preparation of modern textbooks for secondary schools, new teaching methods, examinations and assessments of student achievement. In the health sector, two new hospitals in Sheki and Agdash were built with the World Bank funding, more than ten health facilities were repaired, and overall support was provided to improve the efficiency of medical services. It was with the support of the WB that the government developed a new law on pensions in 2005, and established a social assistance program in 2006. Also, special attention is paid to environmental issues. In this regard, the implementation of the project Unified Solid Waste Management System has been completed already as part of the rehabilitation of the Balakhany landfill for neutralizing solid household wastes. "This project received a special prize from the World Bank," Minister Mustafayev said, adding that the Azerbaijani government is interested in expanding the system of solid waste management throughout the country and further cooperation with the World Bank in this direction. Initially, the World Bank lent $29.5 million for this project and the government allocated another $11.5 million. In June 2013, the World Bank granted additional credit to Azerbaijan for the implementation of this project, $47.1 million, while the government provided extra $8 million.

WB invested more than $1.8 billion in the transport sector of Azerbaijan to improve the East-West transport corridor and the main roads of the country.

Another major program is Azerbaijan Rural Investments (AzRIP), which includes measures to create infrastructure in rural areas and increase farmer incomes. As a whole, about $100 million was allocated for two phases of the AzRIP. As a result, about 1.5 million rural residents in Azerbaijan will have greater access to infrastructure and social services. Now the bank and the government are negotiating for the third phase of the project.

Evidently, the two large sectors of the national economy (finance and energy) have not remained without attention. Initially, the World Bank actively participated in the development of the legislative framework, regulation of securities market, preparation of new listing procedures, etc. WB also supported the creation of the State Oil Fund, so important for Azerbaijan. A loan of $400 million was recently approved for the TANAP gas pipeline project, which will ensure Azerbaijani gas deliveries to Europe.

To be continued

Not all projects and programs of the World Bank in Azerbaijan were listed above. The process is still underway, new goals are discussed annually, important decisions are made, and funds are allocated. Currently the country is especially interested in the bank’s support. According to WB Vice President Cyril Muller, the past two years have been difficult for the Azerbaijani economy given the fall of oil prices. "I think that the government took the necessary steps under existing conditions," said S. Muller.

At the same time, Azerbaijan faces four main challenges. This is "strengthening institutional reforms and human capital development, improving the business environment and supporting the financial sector, developing personnel, increasing transparency in the public sector."

According to the chairman of CBA, Elman Rustamov, the Azerbaijani government expects the World Bank's assistance in settling the new challenges in the national economy: "This means ensuring macroeconomic stability, applying a new model of economic growth, diversification of economy, developing human capital, finalizing the restructuring of financial sector."

S. Muller immediately responded, stressing that the development of the non-oil sector and the diversification of the economy should be the main priorities for Azerbaijan. "For our part, we are ready to support the steps aimed at reducing poverty and improving the well-being of the Azerbaijani population," said Muller.

So, by the next anniversary of cooperation, the bank’s pool of joint programs with Azerbaijan will definitely expand.