ADB to support further SOE restructuring in Azerbaijan

The Asian Development Bank (ADB) has extended technical assistance (TA) under Improving Governance and Public Sector Efficiency Program (Subprogram 2) until the middle of next year, Report informs referring to the ADB report following the first and second subprograms.

The TA became effective on December 24, 2019 with an original completion date of March 31, 2021.

“Most of the activities under the TA have been stalled because of the COVID-19 pandemic and the geopolitical situation. The TA has been extended until 30 June 2022 to provide sufficient time to discuss implementation activities with the government, including consultants’ terms of reference and deliverables, and timelines factoring in post-pandemic recovery in the PPEF,” the bank said.

A technical assistance (TA) grant for supporting public sector governance reforms totaling $800,000 was attached to subprogram 2 to support the government in the implementation of the Post-Program Engagement Framework (PPEF) and its associated reforms. The TA had three output areas: implementation of rules-based fiscal planning, further SOE restructuring and strengthening of the framework for fiscally responsible and planning-relevant PPPs, and enhancing access to finance and further improving the business environment.

“The government and ADB agreed on a PPEF to sustain the aimed outcomes of the bank’s programmatic engagement and the continuous policy dialogue to incorporate important lessons from international experience (especially in fiscal and public financial management, and financial sector and SOE reform programs in other countries),” reads the report.

The TA grant is expected to prepare proposals for the next phase of associated reforms, according to the report.

Improving Governance and Public Sector Efficiency Program consists of two subprograms aimed at improving public sector governance and diversifying the economy through increased private sector participation at the expense of greater access to finance and a better business environment. The Azerbaijani government, by reforming the legal and institutional spheres, also contributes to the improvement of the business environment, access to finance for small and medium-sized enterprises (SMEs).

The cost of the program was estimated at $500 million with a period of implementation in 2018–2019.

As part of this program, the Azerbaijani government carried out reforms in the field of state financing, improving corporate governance in state-owned companies and in the financial sector. According to ADB estimates, the introduction of corporate standards in state-owned companies was an important reform implemented.

Azerbaijan has been a member of ADB since 1999. During the period of cooperation, the bank provided loans to Azerbaijan for over $4 billion.