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 Press release - Institution Building In Azerbaijan (WB)

 Press release date: 26.07.1995

  FOR IMMEDIATE RELEASE 
The World Bank
1818 H Street, NW, Washington, D.C. 20433, USA
News Release No. 96/002 ECA

Contact: Jan Pakulski
Phone: (202) 473-1797
Fax: (202) 522-2633
E-mail: JPakulski@Worldbank.org

INSTITUTION BUILDING IN AZERBAIJAN

WASHINGTON, July 26, 1995 - The International Development Association (IDA) yesterday approved a credit of SDR 11.5 million ($18.0 million equivalent) to help institution building in Azerbaijan.

The World Bank Group also announced the establishment of a Resident Mission in Baku to strengthen Bank and IDA programs in Azerbaijan.

The future of the countrys economy depends on how Azerbaijan responds to the major challenges of stabilization and structural reforms. With the help of the IMF, the Government aims to:

  • unify exchange rates;
  • reduce the budget deficit to 4.5 percent of GDP in 1995;
  • introduce a monetary program that supports the above fiscal objectives;
  • reduce inflation to 2 percent by the end of 1995.

In order to enhance structural reforms, the Government liberalized prices and trade and adopted a law on privatization. It is also committed to reforming the legal framework and financial sector.

The objectives of the Institution Building Technical Assistance Project are:

  • in the short term, to support the Government in formulating and implementing reforms to move to a market oriented system;
  • in the medium term, to facilitate institutional building in order to ensure that Azerbaijan will have the capability to implement and sustain reforms.

The project will assist Azerbaijan in four main areas.

1. Privatization and Enterprise Reforms

The State Property Committee will receive support to:

  • develop a privatization strategy and implement the privatization of medium and large enterprises, address public enterprise reform issues, and develop the framework for capital markets;
  • establish a basic financial database on enterprises, facilitate a mass privatization program using vouchers, and evaluate the privatization as it is implemented;
  • organize training and study tours for local staff in order to become familiar with privatization methods in other countries and develop their own model for Azerbaijan;
  • disseminate information about the privatization program, and encourage active public support and participation;
  • develop an institutional and legal framework for capital markets.

2. Strengthening Macro-Economic Management

This component of the project will assist the Ministry of Finance to formulate, monitor and implement budget systems that reflect the needs of a market economy.

In addition, the State Tax Administration will receive support to broaden the tax base and capture especially the newly emerging private sector. It will also be assisted in strengthening the timely assessment and collection of tax revenues in an inflationary environment.

3. Financial Sector Development

This component will:

  • provide equipment for the initial phase of the development of the payments system, assist with training, and finance a feasibility study for the development of a new payments system in the medium term;
  • assist the Ministry of Finance and the National Bank of Azerbaijan to introduce modern auditing and accounting for enterprises and commercial banks;
  • strengthen the banking supervisory function, and undertake financial studies of large commercial banks;
  • assist in training staff for the National Bank and commercial banks.

4. Legal and Regulatory Framework

This component will assist the Secretariat of the Parliament to:

  • create a legal framework suitable for a market economy;
  • coordinate legal technical assistance relating to economic reform;
  • draft new laws, decrees;
  • support regulations in the areas of corporate law, the commercial code and taxation;
  • provide short term consultants in specialized areas and training programs on legal issues in the countrys transition to a market economy;
  • develop commercial law, law on natural monopolies, and revise anti-monopoly legislation.

The approved credit will finance 100 percent of the foreign exchange costs of the project.

The credit is extended at standard IDA terms for over a period of 35 years, and carries no interest.

IDA, a World Bank affiliate, provides assistance to the worlds poorest countries on highly concessional terms. Azerbaijan joined the World Bank in September 1992. This institution building project is the third operation supported by the Bank in Azerbaijan.



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