Business

IMF APPROVES THREE-YEAR LOAN FOR AZERBAIJAN

By Anar Jabrayilli Azernews Staff Wrter

The Executive Board of the International Monetary Fund (IMF) approved in principle a three-year loan of about $100.2 million under the Poverty Reduction and Growth Facility (PRGF) to support the government's economic program and effort to alleviate poverty.

Following the Board discussion on the Azerbaijan Republic, Stanley Fischer, First Deputy Managing Director and Acting Chairman, said: "In recent years, Azerbaijan has achieved strong growth and low inflation. Growth has stemmed mainly from the oil sector. Achieving sustained growth in other sectors is a central policy objective, and critical to an effective attack on poverty, which is widespread. In this connection, the vigorous continuation of structural reforms, and improved governance, will be essential."

PRGF loans carry an annual interest rate of 0.5%, and are repayable over 10 years with a 5.5-year grace period on principal payments.

A final decision by the IMF Executive Board was made on July 5 pending discussion of the Azerbaijan Republic's Interim Poverty Reduction Strategy Paper by the World Bank Executive Board. The IMF decision will enable Azerbaijan to draw about $20 million under the PRGF loan from the IMF.

According to the Azerbaijan office of the WB, the meeting approved the Azerbaijan government's commitment to reduce poverty in the republic through economic and social transformation. The Board also highlighted the importance of a rational utilization of oil revenues, creation of new jobs and development of industries beyond the oil sector.

The meeting also approved the IMF and IDA assessment and consented the allocation of $100 million the Azerbaijan government had asked for to implement the strategy.

Azerbaijan to receive $20 million from IMF this year

Finance Minister Avaz Alakbarov and deputy director of the IMF European department's south-eastern division John Wakeman Lynn held a news conference Tuesday dedicated to Azerbaijan's relations with IMF and the Fund's last week approval of the Poverty Reduction and Growth Facility program for Azerbaijan.

Mr. Alakbarov said IMF had given a positive assessment to Azerbaijan's recent economic indicators, thanks to which the Fund allocated $100.2 million to implement the mentioned project. The credit will be provided in 7 installments, the first two of which totaling $20 million will arrive at the end of this year. the minister described the document signed by the IMF Executive Board as an interim one, saying that the main document, the strategy, would be prepared next year.

Mr. Lynn said the project has three key objectives: building up macroeconomic stability, achieving greater economic growth in non-oil sectors and improving management. Characterizing Azerbaijan's economic indices as normal, Mr. Lynn emphasized that this had largely been achieved thanks to the energy sector.

"We want the non-oil sector to be developing in parallel with the oil sector, which is why we have allocated the $10.2 million credit to your country", he said.

GDP per capita to rise

The prognosis of key economic indicators for the period between 2001 and 2005 has been compiled on the basis of the "Poverty Reduction and Growth Facility" program drafted by the Azerbaijan government and approved by the IMF.

According to the forecast, in 2001 GDP is expected to rise 12.3% to last year, in 2002 8.6%, in 2003 6.6%, and in 2004 10.3%. In 2005, the growth is expected to constitute 14.5%, with nominal GDP per capita of $999.

IMF is expected to loan $100 million to Azerbaijan to put this three-year program to work.

Azerbaijan will be the first CIS country to receive a credit from an international financial institution as part of the "Poverty Reduction and Growth Facility" program.

IMF loans a total of $462.5mln to Azerbaijan to date

Since 1995, the International Monetary Fund (IMF) has provided advantageous credits totaling $462.5 million to Azerbaijan, according to Finance Minister Avaz Alakbarov. He said the credits mainly targeted building of macroeconomic stability, reduction of inflation and state budget deficit. $91 million has already been repaid.

4 COMPANIES INVOLVED IN BIDDING

The tender announced by the "AzeriGas" JSC for construction of a gas compressor station and the Garadagh-Digah-Severnaya gas pipeline was declared open in a ceremony Monday. The tender commission comprises representatives of "AzeriGas", Ministry of Economic Development, Cabinet of Ministers, etc.

Chairman of the commission Nazim Samadzadeh said 48 companies had taken interest in bidding, but only 8 were selected. 3 of the 8 then refused to participate, while one more did not submit a proposal yet. The projects proposed by the remaining 4 bidders have the following value: SOCAR-Kawasaki consortium - JPY12,491,5, Nigata-Nissho-Iwai - JPY10,936,000,000, Mitsui-Toyo - JPY11,950 (with an alternative bid totaling JPY13 billion), and NipponSteel/Numitomo - JPY14,025,2.

All the 4 have provided a 3% security bid. The tender commission is expected to consider the bids within 90 days, then announce the winner and send the outcomes to the Japanese Bank for International Cooperation (JBIC).

The Bank has allotted JPY118 billion under the implementation of the project.

Gas pipeline construction to complete in 2003

Under the requirements of the tender, construction of the Garadagh-Digah-Severnaya gas pipeline is to take 630 days to complete. Together with 90 days that the tender commission needs to identify a winner and 30 more days for the approval from JBIC, the completion of the project should be anticipated in July-August 2003.

According to the project, the gas pipeline will be 90km long, of which a 45km section from Garadagh till Digah will be laid in 1,000-mm pipes, while the remaining 45km section, from Digah till Severnaya power station, in 700mm pipes.

The compressor station will be equipped with the operating and back-up facilities, which, receiving gas under pressure of 12-15 bars, will be pumping it into the pipeline under pressure of 30 bars.

A total of 10-12 billion cubic meters of gas can be transported through the gas pipeline a year.

RAILWAY OVER-FULFILS 6-MONTH PROJECTIONS

In the first 6 months of 2001, the Azerbaijan railway dispatched 6.2 million tons of consignments (including 5.6 million tons of oil and oil products), or 113.5% of the plan. The rise over 2000 constituted 744,000 tons (64%).

A total of 7.5 million tons was transported between January and June, or 4.5% over projections, chairman of the Azerbaijan railway office Ziya Mammadov told a traditional Friday news conference at the Yeni Azerbaijan Party head-quarters.

He added that 2.2 million passengers used the railway, which earned AZM17.2 billion, or AZM5.5 billion over 2000.

The railway executive indicated that 30 bridges had been repaired in the past 4 years, maintenance work carried out on borderline checkpoints in Boyuk-Kasik and Yalama, etc.

Sleepers manufacturing plant to be built

The Railway Office in currently in talks with Turkish "Tapa" over construction of a railway sleepers manufacturing plant in Baku.

Mr. Mammadov says the plant, valued at $2 million, will produce 150,000-200,000 sleepers a year. Construction is expected to commence shortly and first products to emerge in December.

According to Mr. Mammadov, this will be the first such plant in Azerbaijan as previously the sleepers were purchased abroad at a high price.

The plant will be built using the EBRD credit to the Azerbaijan railway.

Clinics to be privatized

Some 30 medical institutions of the Azerbaijan Railway Office will be put on privatization, chairman Ziya Mammadov told journalists Friday.

According to him, it is too expensive for the Office to upkeep and develop these institutions, as AZM8 billion is spent on them from the railway office's budget every year.

Due to the financial constraints, the Bilajari railway hospital, the tuberculosis dispensary and other clinics and hospitals will be privatized, he said.