Minister of Economy Acknowledged That Support of Business and Population Will Require 2.5 Billion Manat

Baku / 31.03.20 / Turan: Azerbaijani Minister of Economy Mikail Jabbarov in an interview with state television on March 30 announced the government’s plans to implement 9 programs for 2.5 billion manat (3% of GDP) to support businesses and people affected by quarantine measures in connection with the Corona Virus COVID-19.

It is noteworthy that earlier it was a question of 1 billion manat, but a more in-depth study of the problem revealed the need for additional financial investments in the affected sectors and spheres of life, the source of which, most likely, will also be the state budget.

“Our working group was given 15 days (until April 3) to prepare proposals to assess the impact of the Corona Virus pandemic on the economy of Azerbaijan. We have prepared 9 programs, and the cost of these programs is initially estimated at 2.5 billion manat or 3% of GDP,” Jabbarov said.

According to him, 4 sectors of the Azerbaijani economy (20 areas of activity) were severely or substantially affected by the Corona Virus.

“Two out of 9 prepared programs will be aimed at redressing damage to entrepreneurs in these sectors. So, the first program will cover 44 thousand legal entities (organizations, structures, etc.), in which 304 thousand people work. These are 11 areas of activity (public catering, services, tourism, hotels, etc.) that are 100% affected by the Corona Virus. To compensate for the damage, the state is supposed to pay salaries to these workers. Another part of this first program will cover the 9 remaining lines of business that have suffered significant damage from the Corona Virus (the amount of damage incurred is 70%). It is planned that 50% of the wage fund in these areas will be reimbursed by the state,” the Minister said.

The second program will concern approximately 290 thousand micro business entities and they will be provided with assistance equivalent to the volume of tax payments for 2019.

The third program deals with tax incentives and tax holidays for business (details will be agreed and announced later), and the fourth program - providing support to mortgage borrowers.

Under the fourth program, the head of the Ministry of Economy emphasized that construction will be the key sector that will restore the economy in the aftermath of the pandemic, because this sector is time-consuming, associated with domestic production of raw materials, socially oriented and has a multiplier effect.

The fifth program concerns the support of companies involved in passenger transportation, the sixth will clarify certain concessions on public utilities for the population (after all, under quarantine conditions, citizens were ordered to stay at home and utility bills increased).

The seventh program will cover other issues of the social block.

The Minister focused on the two remaining programs in more detail, and in fact one of the AZN 1 billion promised by the head of state will go to one of them.

“One of 9 programs will provide support for a business loan portfolio totaling 1 billion manat. What is the essence of this program? We plan to repay at the expense of the state (through the Entrepreneurship Development Fund) interest on loans for business (taken before March 9), the rate on which is up to 10% per annum. At the same time, one of the main conditions is that the entrepreneur must be an exemplary payer of the loan (that is, his credit history is important),” Jabbarov emphasized.

As for the latter according to the announced list of the program, it is the issuance of new loans to business, which will revive the banking sector and positively affect the financing of the real sector of the economy.

“According to them, it is planned that the state will repay 50% of the interest on loans that were raised at a rate of no more than 15%,” the Minister said.

He specified that these two lending programs will still be discussed with the relevant government agencies of the country and the Central Bank.

In particular, the issue of restructuring and deferring consumer loans is being studied.

“In the coming days, the final design of all these 9 programs will be discussed with the public and private sectors,” the head of the Ministry of Economy summed up.

Apparently, Jabbarov’s speech was addressed not only to business and the public, but also to deputies of the Milli Majlis, as on April 3, the government will appear before the newly elected MPs with a report for 2019 and with economic measures for 2020.

The impression from the Minister’s interview with AzTV is metered verified information and many questions that can be clarified later.   —0—