The duty of the state is to support targeted social groups

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- Rashad bey, the Cabinet of Ministers announced an Action Plan to eliminate the effects of the coronavirus on the economy. The plan envisages support for entrepreneurs and payments to the unemployed. But even though the plan shows all this, people still have confusion and questions. Rashad bey, tell me, who will be able to benefit from this Action Plan?

- First of all, I would like to note that the benefits and supports reflected in the Action Plan are far below expectations. Both citizens and businesses expected more serious and comprehensive support. Even some concessions are conditional, for example, non-dismissal of employees, full implementation of fiscal and tax obligations for 2019, etc. The announced support measures cover the 20 areas of activity most affected by the pandemic, including tourist accommodation, travel arrangements, catering, areas of activity such as restaurants, cafes, etc., the passenger transport segment, certain activities in the areas such as the import of finished products or raw materials, taking into account the risks to the food and medicine supply in the country. Furthermore, the construction sector will be supported in order to reduce the scale of the economic recession. Support in this area will be provided by promoting more demand. A number of social measures are also included in the plan, including the continuation of benefits for families receiving targeted social assistance and expired or registered as unemployed, support for low-income families in the cost of tuition fees, etc.

- Does this Action Plan fully cover every person who has lost their income in this quarantine regime or has lost their business in any way?

- No. It must be acknowledged that this Action Plan is aimed at the main affected areas, which in itself is one of the factors weakening its coverage. Second, millions of citizens, who are members of the underground labor market and take the income of the family budget out of work today but have not yet generated additional costs for the state, will not be able to benefit from these programs.

How much money is allocated for the Action Plan? Because there are different figures. Some say 2.5 billion, some say 1 billion.

This is one of the most interesting points. For days, the media disseminates that 2.5 billion or even 3 billion AZN was allocated for support. In fact, the programs will be funded by a total of 1 billion 343.6 million AZN. 1 billion AZN of these funds will be provided from the state budget, and 343.6 million AZN from other sources (state resources, UN, World Bank, etc.).

Apparently, 1 billion AZN loans issued by banks and 500 million AZN loans that will be encouraged in the future are also estimated as funds allocated by the state. However, it should be taken into account that these funds belong to the banks. The state intends to spend a total of 70 million AZN, which is included in 1 billion 343.6 million AZN, to finance these programs.

As you know, the parameters of other countries' rescue plans are announced in the media every day and widely discussed in society. In my opinion, given such points, the figures are deliberately distorted and used more for PR purposes.

- Another controversial issue is the number of unemployed. We all know that there are many unemployed people in Azerbaijan and many of them are not officially registered. The figure released by the government shows 200,000 people. Although previously this figure was much lower in official documents. Now, the sudden display of 200,000 has raised some questions and doubts. Do you have a statement for this? At the same time, how should the distribution of benefits to other unregistered unemployed be regulated?

- The State Statistical Committee announced that as of March 2020, the number of unemployed registered with employment agencies was 90,800. It should be noted that this is not a figure showing the unemployment rate. In fact, under normal economic conditions, the number of unemployed varies from about 250 thousand to 300 thousand people. But the methodology prefers to consider the job seeker as unemployed. But at the same time, another issue is that the pandemic entered the active phrase in Azerbaijan in March. Due to this, a sharp increase in the number of unemployed in March is inevitable. It is possible that these figures are already in the official bodies. Or the possibility of a sharp increase in current appeals was taken into account. Because the provision of one-time allowances of 190 AZN for 2 months will encourage people to apply for this. Thousands of citizens have already started registering in the system to take advantage of this opportunity. I think this is a partial estimate.

- One of the interesting issues is that no payment is given to employees without a contract. They will not receive assistance as unemployed or as victims. Do you think this is fair?

- No. That's not fair. Everyone has suffered from the pandemic. I even claim that the participants of the illegal labor market have suffered the most and that no social rights are protected by the employer. They are also citizens of this country. They also have families and children waiting for bread at home. You know, most of these people had money just enough for going to work tomorrow. We have declared social quarantine and restricted the activities of these people. This means that we must reimburse their necessary expenses. We need to be there for them by helping them with food, medicine, rent, and utilities. You know, the shadow economy is bad, but it's better than no economy at all. These people try to live from hand to mouth in some cases to live without burdens for anyone under the existing conditions. They do not apply to the state and create an additional financial burden. Just considering this point is enough for us to be there for these families. I believe that it is useful to avoid any step that would cause discrimination in cases of force majeure.

- People were waiting for this aid package to suspend utility payments for several months and freeze bank loans, which we do not see in the Action Plan. Why do you think the government did not consider support in this matter?

- You are absolutely right. Fixed expenses pose serious problems when family incomes are reduced in whole or in part. Therefore, the provision of discounts on utilities had to release users for a period of time, ie during a pandemic, within certain limits. But instead, each family is offered a two-month discount of 4 AZN. This amount will not reduce the financial burden of any family and I consider the funds allocated here to be wasted. In my opinion, this package was developed under the influence of fiscal pressures from falling oil prices and the government does not want to be under a heavier financial burden. The issue of loans is partially different. Commercial banks are the main party here. The Central Bank can recommend commercial banks to go on credit holidays by supporting the liquidity of commercial banks. I would like to note that a citizen who has no money will not repay the loan in any case. Therefore, the creation of conditions that support the habits of financial indiscipline must be prevented from now on. We have an unpleasant experience in this regard. We tried to solve the problem that arose in 2015 by paying a heavy price in 2019. But its effect is weak. Therefore, the Central Bank, as well as the relevant government agencies, should reconsider this issue and create conditions and norms to support the issuance of appropriate holidays.

- What do you think? What else would be good if there was a plan of proposals? What steps should the government have taken to cover the damage to every citizen? What would you suggest?

- Support for business is much better than social events. But at the same time, it would be good if the support for micro-entrepreneurship is not conditional and covers a longer period. Because this segment is more vulnerable and unstable.

Support for citizens, on the other hand, could be shaped as family support programs by taking into account fixed costs by creating different mechanisms. In this case, financial assistance could be provided to families during the pandemic and social quarantine, based on rent and utility costs, demand for food and medicine.

I understand that no country fully compensates for the damage and this is not possible. However, optimization of the amount of damage, keeping social security, as well as nutrition at the minimum level, should be taken as the main criteria. I am not in favor of helping everyone. This is not true. This is not in the interests of citizens. Consider that the taxes you pay are spent on a millionaire or a corrupt person. Therefore, targeted social groups must be identified and mechanisms must be considered for how to deliver state support to them. This is one of the most important obligations of the state.