The distinguishing feature of the World Bank (WB) crediting policy to Azerbaijan is, it is generally focused on realization of projects of social character.

By means of projects, financed at the cost of World Bank loans new rules, procedures and instructions are applied in health and Azerbaijan education system, and international experience is introduced.

Besides, experience on foundation of team of executors, who are able managing finances for effective spending is the case. These loans are of long term effect, i.e. outcomes of crediting for social projects will not be evident soon, they are considered for future generations.

However, benefit is already gained from the World Bank loans, as managers, teachers and medical employees, involved in the projects, learn working in other conditions, displaying initiative and realizing specific ideas into the life.

The World Bank loans, directed towards realization of project on reforms in the area of Azerbaijan health serve, as a trigger for reforming of the area, which suffered from curtailment of state expenses.

According to the last data of the World Health Organisation (WHO) Azerbaijan government spent for health requirement by 32 dollars less per capita than in 1998. At that, national income of the state was increasing by 10% per year. Insufficient state financing instigated first to introduce paid services to this sector. And its subsequent abolition introduced, in its turn, confusion, which is reigning presently in this area.

Excessively increased staff of medical institutions and significant number of hospital beds, comparing with low quality of rendering of medical services and lack of facilities of service rested with heavy burden on shoulders of Azerbaijan nation.

The Board of Directors of the World Bank approved allotment of five million US dollars to Azerbaijan for financing of the project of reforms in the area of health of the republic. The loan, considered for 35-40 years period, under 0.75% of interest per annum with ten-year privilege period, had innovation-cognition character, which envisaged, except purposeful direction, conducting of complex researches, enabling to define, what changes are especially necessary for national health and require additional financing.

Thus, on the eve of the first project, it became as clear as a day, that sector really needs of finances, and one cannot do with five million of loan. It is the second year, as by rates of growth in 2005 health expenses of the state budget already exceeded among other items.

This year it will increase by 46.1% and will bring in 577.8 billion manats (about $123mln). But growth of expenses is not accompanied with health measures. Therefore, almost half of the whole growth will be direct

ed to increasing of salary fund, which is caused mainly to increase rate of minimal salary. Taking this into account, the World Bank increased loan by 10 times and reached an amount of $50 million dollars. We would like to specify particularly, that WB proposes to Azerbaijan party the loan with period of 50 years and with first payment of interests after ten years.

At the cost of these funds it is proposed to construct health centres in five regions of the state. Functioning of the stationary service, clinic and first aid service is envisaged in these centres.

Centres will be provided with modern equipment and will render surgical and therapeutic services to population of these regions. The project is to be realized from 2006.

Analysis indicates, the new project will be, practically, logical continuation of project under realization of the World Bank in the area of health “Reforms of the health system”, its realization period expires in September, this year. Measures on health reform were undertaken within frames of this project in five pilot regions of the state- Salyan, Shamkir, Khachmaz, Sharur and Geychay.

Particularly, running of training, conferences, repair works in institutions, studies on health problems in regions, purchase of 40 first aid cars and field ambulance is envisaged. The purpose of development of the project is to strengthen and to reform primary services of the health in the region by means of improvement of access, quality and application of primary services of health and increase of knowledge of medical employees.

It is notable, that projects financed by World Bank loans, cover social life of regions of the state. Many citizens of regions are ready to pay for medical care, but provided that, this medical ins

titution will be located close to their houses and services will be of high quality.

Training centres and storehouses for medical preparations, supplied by UNICEF, are already established in these five regions of the state. Within frames of the project small repair works were conducted in 45 medical institutions of these regions, medical preparations for first medical aid were purchased, training and seminars for medical employees with participation of foreign specialists were conducted, though services, rendered by these specialists were rather expensive.

Thus, by the end of 2004, from the amount of loan 4,328 million dollars, 4,024 to million dollars were spent on consultation services and just 0,304 million dollars were spent on accomplishment of specific technical works.

Namely, these two items of spending of loan finances such, as redecoration and services of foreign consultants were accepted by our party, as wrong squandering of loan finances and Azerbaijan, which is to reimburse these finances, is in very sticky and unfavourable condition, whereas the state needs mostly strengthening of material and technical base of health system, improving of qualification of medical specialists and training of corresponding personnel.

Due to this point, the Ministry of health presented to community application of World Bank loan on the project “Reforming of health of Azerbaijan” as non-rational. It is embarrassing, that dissatisfaction was stated only on the eve of completion of the project 1st December 2004 at the conference, devoted to reforming of health in Azerbaijan.

It is necessary to indicate, that indirect outcome from such type of loan projects is Azerbaijan party learns participating actively in compilation of the project and forwarding its requirements to creditor.

Thus, judging by this project, absence of work experience with international credit organizations resulted in conducting of work within frames of this project by UNICEF, and the ministry was beyond this process. Inability of foreign consultants to learn specifics of health sector of Azerbaijan did not bring expected outcomes from the project.

Thus, expressed in the project ideas on establishment in regions of centres of health, functioning, as subsidiaries of the Central clinical hospital and enabling inhabitants of this area, using its services, were not realized. Instead, finances of this loan were distributed to all regions for realization of redecoration of medical institutions and delivering of lectures by doctors. As Azerbaijan party indicated, each foreign consultant, reading lectures, gets 30 - 40

thousand dollars, whereas highly qualified specialists are available in medicine sector, in Azerbaijan, the problem is absence of possibility to improve qualification of medical personnel with aim to apply modern medical technology.

Fact is the state learned putting forward its own demands and conditions, where it will be able continuing cooperation and getting new loan. Fact is the state can oblige taking into consideration its own opinion.

However, under these conditions responsibility for effectiveness, both economical and, first of all, social is to be transferred to Azerbaijan government and to the Ministry of health, particularly, 50 million dollars considered for the new project, are namely, those deficient money, which even if can't improve the health situation, but, at least, will enable solving several urgent problems.

By means of allocated finances one may in proper time solving paramount tasks, which promote development of health system with its subsequent compensation after many years. And meantime, this is not yet prestigious and evidently, not every person affords paying for services.

The life proves, national medicine is not free of charge and in many cases it is not of high quality. As yet, the Constitution of Azerbaija

n states contrary to this: in case of any disease all Azerbaijan citizens have a right for high quality medical care and free of charge.

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