Baku 20° C
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After Azerbaijan regained its territorial integrity as a result of the 44-day war, reconstruction and restoration of the liberated territories and reintegration of the Karabakh and East Zangazur regions into the national economy became the main priority. At the same time, continuous activities are being carried out to strengthen the social security of the military personnel who secured the victory. Finance Minister Samir Sharifov answered the Report's questions regarding both these issues and the state debt:
- In the state budget of Azerbaijan for 2024, 3.83 billion manats ($2.25 billion) are planned to be allocated for the reconstruction and restoration of the liberated territories, about 20% less than last year. Can this amount be increased later? How do you evaluate the possibilities of attracting loans from international financial institutions for the financing of projects in Karabakh and East Zangazur?
- I am not in favor of looking at the issue as a reduction of funds. First of all, we are trying to maintain the level of funding for the reconstruction and rehabilitation of the liberated territories. There is no doubt that the financing of each event is related to the state's financial capabilities. We allocate funds to projects whenever possible. Last year, initially only 3 billion manats ($1.76 billion) were allocated from the budget for these purposes. However, later the state's financial capabilities increased, and in June 2023, according to the recommendation of the president of the country, the budget was revised.
There were two main reasons for this. The first reason was to strengthen the country's defense capabilities. Another reason was the financing of measures for the reconstruction of the liberated territories and their reintegration into the country's economy. As a result of the revision, additional 1.8 billion manats ($1.05 billion) were allocated from the budget for these purposes. I should also say that during the implementation of the budget last year, additional funds were allocated both from the President's reserve fund and from the budget reserve fund. Thus, the total amount exceeded 5 billion manats ($2.93 billion). This cannot be ruled out this year either. The state budget for 2024 also provides certain funds. Depending on the state's financial capabilities, if there are additional revenues or budget funds saved, those funds will be directed to the goals you mentioned first.
Azerbaijan is carrying out the reconstruction and restoration of the territories freed from occupation only at the expense of its own financial resources, and this process will continue. As for attracting loans for these projects, work can be done in this direction. We have certain intentions in this regard. But at the moment, these are just topics of discussion. Therefore, it is impossible to say anything concrete.
- How much funding will be allocated from the state budget this year to provide housing for servicemen who served flawlessly in the Armed Forces for 20 years and more?
- As you know, there is a legal framework for this purpose. A special commission, “On measures to strengthen the social protection of servicemen of the Armed Forces of the Republic of Azerbaijan,” was established upon the decree of the President of Azerbaijan dated December 28, 2011. Representatives of various bodies are represented in that commission. The Commission, holding periodic meetings, resolves the issue of enlisting military personnel who meet the relevant criteria and considers the issue of providing apartments to military personnel on duty. That is, this process is ongoing. For this purpose, 35 million manats ($20.56 million) are allocated from the budget this year.
Today, servicemen can take advantage of the preferential mortgage lending mechanism to solve the housing issue. At this time, I would like to especially mention the Decree signed by President Ilham Aliyev in December of last year, "On measures to promote the education of youth in the military field.". According to the document, the state will cover 15% of the loans of officers and ensigns who buy houses under preferential terms at the expense of the Mortgage and Credit Guarantee Fund. The program is intended for students studying starting in the 2024–2025 academic year. They will get this right after 5 years of active military service as an officer or ensign.
- How do you assess the state of total public debt in Azerbaijan, including foreign debt?
- The total amount of state securities in circulation as of January 1 of this year is over 6 billion manats ($3.52 billion). If we take into account that the value of the gross domestic product (GDP) in Azerbaijan is 123 billion manats ($72.26 billion) according to the results of 2023, this means that the share of government securities in GDP exceeds 5%.
As you know, in 2018, there was a revival in the government securities market. This was related to the adoption of the "Strategy for the Management of Public Debt for the Medium and Long Term" by the order of the President of the country that year. The strategy first envisages that the foreign public debt will be gradually replaced by the domestic public debt. I believe that this process continues successfully. As a result, the specific weight of foreign public debt in the total public debt has decreased. Certain indicators of the ratio of foreign public debt and general public debt to GDP are presented. Currently, they are considered at the level of 30% after being revised. We anticipated this restriction for early 2024. Thus, the ratio of our total public debt to GDP is slightly more than 21%. As planned, our foreign debt is decreasing. Its ratio to GDP is already below 10%. Our foreign public debt decreased last year in absolute terms. So these processes are ongoing.
- In November of this year, Azerbaijan will host the 29th session of the Conference of the Parties to the UN Framework Convention on Climate Change (COP29). How do you evaluate the organization of such a prestigious event in Azerbaijan? Is the COP29 financing mechanism being worked on?
- Azerbaijan has already justified itself as a venue for major, prestigious international events. Political, humanitarian, and sports events of an international scale have been successfully held in our country. In this sense, the state of Azerbaijan is known as a reliable and progressive host in the world. From this point of view, there is no doubt that COP29 will be successfully held in Azerbaijan.
It is a great success for us that all countries in the world voted to hold this event in Azerbaijan. Special work is being done on the financial side of it. Certain funds will be allocated from the state budget. I will not be able to give any opinion about the amount of those funds yet because the organizing committee and the operating company established under it, are making relevant calculations. If there is a need to allocate financial resources from the state, the sources will certainly be provided. As the host, certain expenses fall on our share. The participants will cover their own expenses for arrival, departure, and accommodation.
