The government should be more selective with involved foreign loans

The government should be more selective with involved foreign loans.

As stated in the report of the Coalition of Bank Monitoring "external public borrowing and public participation in projects of international financial institutions", for the past 10 years in various structures under the state guarantees to take $ 10 billion 495 million, of which more than half ($ 5 billion 818 million) was mastered. In addition to traditional donors (World Bank, Japan International Cooperation Agency, the European Bank for Reconstruction and Development, the Asian Development Bank), with a strategy of relations with international debtors, creditors local contractors serving American, Scottish, Czech, Korean, Iranian banks, the Government of China and Kazakhstan and a list of their growing from year to year.

According to a board member of the Coalition Zohrab Ismayil, in 2011, the share of public debt to GDP declined in comparison with 2010 by 1.7%. In this case the absolute debt increased to $ 4 billion 817 million, together with an increase in the total budget.

From 2004 to 2012, Azerbaijan attracted for the implementation of 71 projects $ 9 billion 545.9 million - more than a third (33.66%) of the projects that are traditionally utilized by the Ministry of Transport (the repair and construction of 18 sections of roads spent $ 3.5 billion and implementation of 5 transport projects - $ 1.5 billion). In the second place (24.09%) is JSC Azerenergy, and over this period of 10 projects worth $ 2.3 billion under the state guarantee.

Water and sewer system upgrade (8 projects) took and will take from the budget $ 1 billion 66 million, 9 projects to improve irrigation, reclamation and re-vegetation of arable land took $ 335.9 million, almost as much - $ 354.2 million was received from international donors for the implementation of 12 social and cultural plans of the government. Under the development of the economy and the financial system foreigners lent Azerbaijan $ 261.9 million, and to improve the environmental situation - $ 227.9 million

Speakers are also concerned about the disparities in the World Bank and the Ministry of Finance of Azerbaijan indices. If in 2010 it was $ 35 million, in 2008, for example, it was $ 314 million even with different methodology of calculation of duty under the state guarantee this difference is significant and the impact on long-term debt payments.

According to the speakers, Azerbaijan is solvent, but concern is caused by the structure of budget revenues, with the bigger role played by transfers from the State Oil Fund. In the state budget for the next fiscal year, this amount is expected to be 11 billion 350 million manats ($ 14.46 billion), 2.35 bn more than in 2011 and 1 billion 445 million more than forecast for this year. Given the fact that oil revenues after 2015 significantly reduced and plans to restructure the economy have not yet provided real results, the trend of increase in oil revenues in the budget revenues is negative.

Finally, recommendations were given. The government should limit foreign borrowing and make a long-term strategy to attract loans, giving the priority to international institutions controlling the expenditures effectively. Activities of the government on this point should be transparent and accountable to civil society. The annual reports of public companies and business organizations for the development of such loans must be fully available on their web-sites.

International financial institutions should not only come from the ability of the "client" to pay, but should develop a reliable mechanism for transparency and citizen participation in the preparation and signing of the loan agreements. The Azerbaijani civil society should be a strategic partner of the international financial institutions. It is important to provide translations of documents signed into the Azerbaijani language. - 17D-