Publication: Monitor Volume: 2 Issue: 50

The International Monetary Fund envisages a sizable aid package to support the start of economic reforms in Azerbaijan, IMF Managing Director Michel Camdessus announced yesterday in Baku. According to Azerbaijani officials, discussions focus on a $270 million enhanced structural adjustment loan under exceptionally favorable terms, with repayment in 30 years at 0.5 percent annual interest rate. In addition, the IMF is prepared jointly with the World Bank to support a three-year industrial rehabilitation program through preferential loans. Conditions for the assistance include reducing the state economic bureaucracy, an early start of privatization beginning with the banking sector, focusing state-provided social benefits on the most needy groups, a noninflationary recalculation of wage levels, modernization of tax laws, and liberalization of foreign trade.

Yesterday, on the second day of Camdessus’s visit, Azerbaijan’s president Heydar Aliev abolished by decree the foreign trade control commission and export licenses for a wide range of products and by another decree decoupled general wages and social benefits from the minimum wage. A government meeting chaired by Aliev decided to start privatizing state-owned gas stations. The government also reportedly plans to conform to the IMF’s other recommendations. (15)

The government’s success in cutting the monthly inflation rate from 50 to 2.5 percent over the past year has made the start of reforms possible. Officials also point out that foreign investment in Azerbaijan’s oil projects in effect denationalizes much of the country’s oil sector. (16)

U.S. Delegation Meets Presidents, Reaffirms Interests in the Region.