Non-transparent loans

Baku/22.05.21/Turan: On May 21, the World Bank allocated a loan of $ 65 million to Azerbaijan for the road project "Development of Regional Ties".

The goal of the project, which has a total cost of $95.88 million, is to ensure safe, efficient, climate-resilient traffic on the Salyan-Bilasuvar road.

In general, since January 1, 2021, Azerbaijan has signed loan agreements with international financial and credit structures totaling $13.031 billion, issued directly to the government and serviced at the expense of the state budget.

In the summary report on the activities of the Cabinet of Ministers for 2020, it is noted that this amount was achieved within the framework of 210 loan agreements for 168 projects and programs.

But are all these loans spent for their intended purpose?

According to the report of the Cabinet of Ministers, the loans used as of January 1, 2021, in total, about $3.732 billion was returned. Currently, 19 projects are being implemented within the country through external loans, including 8 in the transport sector, 4 in the rehabilitation of water supply and sewerage systems, 2 in the social sector, 2 in the agricultural sector, 2 in the energy sector, and 1 in the justice sector.

So far, the World Bank has committed $4.15 billion to Azerbaijan for 71 projects, the Asian Development Bank - $4.44 billion for 74 projects, the European Bank for Reconstruction and Development (EBRD) - $3.084 billion euros for 174 projects.

The World Bank plans to raise $150 million in Azerbaijan in 2020 alone. Two projects in the amount of dollars were approved. On March 5, the Bank approved a loan of $100 million to the country for the employment support project in Azerbaijan, and on March 26 - an additional $50 million for the project "judicial services and intellectual infrastructure".

A member of the Milli Majlis Committee on Economic Policy, Industry and Entrepreneurship, Vahid Ahmadov, told the Turan news agency that there are certain problems with spending the allocated loans.

"But recently, the Ministry of Finance, on the instructions of the president, took it under control," he said.

The member of the committee noted that there are two types of loans allocated by international financial institutions.

"There are unsecured loans, there are unsecured ones. Loans under state security are issued under state guarantees, there are cases when organizations and companies directly conclude a loan agreement, and there are no guarantees from the state, " he said.

Akhmedov stressed that the agreements concluded with the World Bank are state guaranteed loans. Therefore, they are under control. However, in general, all loans were repaid as intended, but transparency and some other issues were not fully resolved.

Economist Natig Jafarli said that Azerbaijan has a very low level of transparency in spending loans.

"The body that exercises at least a formal mechanism for controlling budget expenditures is the Finance Chamber. They at least formally write a report once a year, in which areas there were budget expenditures, where there are shortcomings. And there is no such report on loans at all, " Jafarli said.

The expert says that the Cabinet of Ministers should provide the public with information about this, and the Ministry of Finance is obliged to control the direction of spending loans through the Department for Cost Control.

"But to date, there has not been a single document concerning the reporting of loans allocated by official structures. Just the amount of funds allocated, the name of the project is not disclosed, but the details of the loans are not disclosed, " he said.

According to Jafarli, often in addition to state loans, there are loans that companies receive under state guarantees, information about them is almost closed.

"There are many state-owned companies that have received billions of loans under state guarantees so far, but have not provided a report on their expenses," Jafarli said.—0—