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A year rich in socio-economic reforms - COMMENT

​A year rich in socio-economic reforms - COMMENT

A year has passed since Ilham Aliyev was elected as President of Azerbaijan for the next time. This period is remembered with a number of successful and estimable steps in economic and social field, deepening of the business reforms, implementation of megaprojects.

Problem of loans was solved

A presidential decree dated February 28, 2019 on ‘Additional measures on solution of troubled loans of the individuals’ should be especially noted. According to the decree, the state will repay the part of the loans up to $10,000, which rose due to devaluation, within three months. With this decree, from which nearly 1 million people will benefit, Azerbaijan demonstrated more systematic and detailed approach on solution of troubled loans compared to other post-Soviet countries, took into account the interests of the population, provided support to the banking sector.

Social defense was strengthened

In the past one year Ilham Aliyev took other steps towards improvement of financial condition of the population, increase of social welfare. In March, the minimum salary rose by AZN 50 or 38.5% from AZN 130 to AZN 180, minimum pension by AZN 44 or 37.9% from AZN 116 to AZN 160. Growth in salaries covered 600,000 people, and the increase in pensions affected 233,000 people.

Property right of house owners was recognized

In the first year of Aliyev’s next presidency, serious steps were taken for protection of property rights of the citizens. Upon the instruction of the Presidential Administration, State Committee for Property Issues started to elaborate concept on documentation of willfully-built houses without documents. That concept will be submitted to the Presidential Administration soon. Moreover, upon the instruction of the head of state, process of fiving extracts to residents in the multi-storey building on registration has started.

Transition to a new economic model took place

Year-on-year, the transition to a new economic model happened, serious changes were made in customs and tax fields. Criteria of micro, small and medium entrepreneurs were updated, the Green Corridor system in the customs was applied, reforms were conducted in the sphere of starting business, license and permits, inspections, connection to power supply networks, increase of access to financial sources, registration of property and foreign trade. Thus, the tax burden of the entrepreneurs was optimized, the tax base was broadened, relations between entrepreneurs and legalization, digitalization and customs-tax administration developed to a more civil level. The highest recognition of the reforms was the announcement of Azerbaijan as the most reformist country in Doing Business 2019. Azerbaijan ranked 25th among 190 countries, a leader in CIS, outstripping most of the G20 countries.

Institutional and structural reforms were also conducted

In the reporting period, a ‘Strategy on development of civil servant for 2019-2025’ was adopted. Agrarian Credit and Development Agency, OJSC Agrarian Procurement and Supply under the Ministry of Agriculture, as well as new central executive power bodies – State Tourism Agency, Food Safety Agency and etc. were established. Small and Medium Business Development Agency started to operate.

Major projects were completed

A number of major projects were completed within the past year. The Southern Gas Corridor was launched in Sangachal, first phase of TANAP in Eskişehir, Turkey, transportation of Shahdeniz 2 gas to Turkey via TANAP has commenced. SOCAR’s STAR Oil Refinery, with the annual capacity of 10 million tonnes, was launched in Aliagha, Izmir. In Baku, a new bitumen plant and liquid gas filling station was launched at the Heydar Aliyev Baku Oil Refinery, first stage of modernization of the refinery was completed. Polypropylene (PP) and High Density Polyethylene (HDPE) plants, as well as SOCAR Carbamide were launched in Sumgayit.

Opening ceremony of TANAP in Eskişehir, Turkey

"We can unequivocally say that the reforms conducted in Azerbaijan within a year covered both social and economic spheres," Economic expert Vugar Bayramov told Report.

According to him, the most attractive reform among this package is the reforms of structure: "Structural reforms were important to increase the quickness of the management system. These reforms consequently lead to deepening of other reforms, especially improvement of business environment, introduction of new opportunities for entrepreneurs, extension of use of e-services, increase of transparency, struggle against corruption. That is, Azerbaijan has deepened the structural reforms essential for the management system. These reforms include abolishment of some bodies, establishment of promptly acting structures, which was very important in terms of speeding up response in the structural management system."

The expert also noted that social reforms also are of great importance: "The Azerbaijani government introduced a broader social package in early 2019. This includes increase of minimum salaries and minimum pensions. The social reforms conducted in the first quarter of 2019 covered more than 2.5 million citizens. This means allocation of extra AZN 2 billion for social needs from the state budget. Support of sensitive groups, as well as increase of minimum salaries, pensions, social benefits should be appreciated."

Vüqar Bayramov

Economist-expert Vugar Bayramov

I hope we will see new reforms in the next months of 2019.

Bayramov says one of the main points for the past year is the decree signed on troubled loans: "This issue had been discussed for a long time since devaluation. As a result, a decree on payment of compensation to citizens suffering from devaluation was signed in late February and, by the initial assessment, more than 800,000 citizens will benefit from the decree. AZN 800 million was allocated from the state budget for this purpose. This decree is, at the same time, important in terms of normalization of the banking sector. For the present, the troubled loans in banks exceed AZN 1.5 billion, which makes 12% of loan portfolio. The concession on troubled loans will lead to a decline in the amount of troubled loans and increase liquidity in banks. At the same time, the Central Bank of Azerbaijan will allocate AZN 682 million to banks with annual interest rate of 1%. This is also significant in terms of increase of banks’ liquidity’.

The expert hopes that these reforms will continue in both social and economic spheres as President Ilham Aliyev promised: "I hope we will see new reforms in the next months of 2019."

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