CAERC talks Azerbaijan's major anti-crisis program

Economy Materials 31 March 2020 18:35 (UTC +04:00)

BAKU, Azerbaijan, March 31

By Eldar Janashvili – Trend:

Azerbaijan’s anti-crisis program is ambitious enough and large-scale compared to other countries, Trend reports referring to Azerbaijan’s Center for Analysis of Economic Reforms and Communication (CAERC) Executive Director Vusal Gasimli.

“Azerbaijan’s anti-crisis program is 2.5 billion manat, which is 3.1 percent of gross domestic product (GDP). For comparison, the Georgian government received a package of assistance in the amount of 1 billion Georgian lari, or 2 percent of the country's GDP. Russia received a package of assistance in the amount of 300 billion rubles, which is 0.3 percent of its GDP. Kyrgyzstan received an anti-crisis package in the amount of 760 million soms, or 1 percent of its GDP, Uzbekistan - $9.5 trillion, or 1.5 percent of its GDP. It is seen that the support program of Azerbaijan is quite ambitious and more wide-scale compared to other countries," he noted.

According to Gasimli, the governmental support program for mitigating impact of global upheavals to Azerbaijan will cover 4 sectors and 20 areas of activity. Working group headed by the minister of economy assessed the affected sectors by 3 categories: the most affected, significantly affected and low-affected ones. This approach is important in terms of fairness, as well as efficient use of resources. In this context, nine program projects are being developed.

“First of all, it should be noted that the program, covers 304,000 hired employees and 44,000 business entities. Given that out of 1.6 million hired employees, 915,000 ones regularly receive wages because they work in the public and oil sectors, accordingly, the state will support 304,000 of the remaining 640,000 hired employees. Here, the salary fund of a business entity will be supported by the state subject to the degree of affect caused by its field of activity. Of course, the main criterion in this case is the average wage at the level of 712 manat," the executive director said.

"At the same time, 290,000 micro-entrepreneurs will receive the governmental support. In this case, the amount of taxes paid by them in 2019 will be taken into account. Also, state programs for tax privileges and support for tax holidays and mortgage credits have been developed. Currently, the state is planning a support package to overcome difficulties that citizens may face when paying credits under the influence of global upheavals. At the same time, difficulties with repaying credits are forecasted not only among households, but also among some entrepreneurs," Gasimli said.

“At present, 7 billion manat has been allocated to households, and 6.1 billion manat to the private sector. In particular, credits worth 2.4 billion manat issued to the trade and service sector and 1.2 billion manat to the transport and communications sector. Thus, the state will allocate 1 billion manat to support the existing credit portfolio, and in this case, such criteria as vulnerability of the sector and credit discipline will be taken as a basis,” Gasimli noted.

Azerbaijan’s Entrepreneurship Development Fund will provide 10 percent support to the credit, which covers a significant part of the credit interest, while in Azerbaijan the average credit makes up 14 percent - 8.8 percent for legal entities and 16.6 percent for individuals. At the same time, the new credit support program will cover a maximum of 15 percent per annum. Thus, half of this credit interest will be paid by the Enterprise Development Fund.

According to Gasimli, within the state support programs, the limit of communal services will be increased, and the major enterprises - AZAL, Baku Transport Agency, Baku Metro, Azerbaijan Railways and others will be involved in the passenger traffic. Support will also be provided to the public authorities. In addition, the state will expand coverage of social programs and provide support to the low-income people. The working group, headed by Azerbaijan’s minister of labor and social protection of population, will also submit its proposals in the coming days.

"Currently under the leadership of President Ilham Aliyev, the largest economic support program in the history of Azerbaijan’s independence is underway. Such a systemic support program minimizes the impact of the largest pandemic in the last 100 years on the country and better prepares it for the post-crisis period. Through the government programs, both demand and supply will be supported, and thereby macroeconomic stability will be maintained," he said.

"These days, it’s needed to more strictly observe the special quarantine rules, because we can restore economic losses, but we cannot return health and human life. For the Azerbaijani state, a citizen and his decent standard of living have the paramount importance," Gasimli added, reminding about necessity of complying with quarantine regime introduced in the country.