|
Table 1. Azerbaijan: Summary and Timetable for Macroeconomic
and Structural Adjustment Policies, 1999-2001 |
|
Policy Area and Objectives |
Measures |
Implementation |
Technical
Assistance |
|
1. Public Sector Reform and Fiscal Policy |
|
|
|
Reorient expenditure priorities |
Undertake functional reviews of central ministry level entities; decrease the number of functional ministries, and redefine their roles |
June 2000 |
WB |
|
|
Discontinue budgetary support for entities performing obsolete or inappropriate functions |
2001 budget |
WB |
|
|
Strengthen cabinet of ministers capacity for policy formulation, coordination; and redesign structure and skill mix |
1999-2000 |
WB |
|
Reform pay, employment, and delivery of services |
Submission to parliament of a new civil service law; introduce a severance pay package |
June 1999 |
WB |
| |
Implement a hiring freeze |
January 1999 |
|
| |
Begin to implement a decompressed public sector wage scale |
from March 1999 |
|
| |
Conduct a treasury-based staffing review |
March 1999 |
WB |
| |
Phased reduction of government employment based on the recommendations of the treasury’s staffing review |
from mid-1999 |
|
|
|
Develop a system to provide monthly data on pay and employment (including private sector) |
2000 |
|
|
Reorient health and education expenditures |
Focus and increase expenditures on primary education and primary health care and maintenance |
1999 |
|
| |
Introduce a system of transparent user fees and prohibit and penalize the use of informal fees |
2000 |
|
| |
Remove barriers to private sector provision of health and education and establish clear regulations and minimum standards for private institutions |
2000 |
|
| |
Develop a free package of basic health services to increase low-income access to health care |
2001 |
|
| |
Eliminate norm based calculation of budget requirements in favor of per capita allocation |
2000 budget |
|
|
Improve the social safety net |
Shift initial responsibility for sick leave benefits from the SPF to employers |
1999 |
|
| |
Raise statutory retirement age for men and women by 6 months each year |
1999-2001 |
|
| |
Reform pension system to create a two-tier system of (i) basic pension, and (ii) funded pension scheme financed through mandatory individual contributions |
2000 |
|
| |
Introduce individual (actual or notional defined contribution) pension accounts for employee contributions; establish a unique identifier code for contributors, and eventually for all persons of working age |
2000 |
|
|
Improve budget formation, planning, and control |
Revise draft law on state budget and submit to parliament, and apply new budgetary procedures during the preparation of the 2001 budget |
1999-2000 |
WB |
| |
Prepare medium-term financial framework (MTFF) to submit to parliament with 2001 budget |
2000 |
|
| |
Establish a macroeconomic policy unit at the Ministry of Finance |
1999 |
KHF/IMF |
| |
Design institutional arrangements to invest future oil revenues, and to decide on their best use |
1999-2000 |
IMF/WB |
| |
Clarify relations between government and ANB regarding payments and receipts of interest on mutual claims, and allocation of central bank profits |
1999 |
IMF |
| |
Develop a multi-year public investment plan (PIP) consistent with the MTFF |
1999-2000 |
WB |
| |
Improve project evaluation capacity in line ministries |
1999-2000 |
WB |
|
|
Strengthen commitment accounting; introduce a financial planning unit; and computerize the Treasury |
September 1999 |
IMF/WB |
|
Strengthen judiciary reform |
Issue implementing regulations to provide enforcement for the bankruptcy law |
March 1999 |
|
| |
Establish and appoint the Council of Judges |
March 1999 |
|
| |
Present the complete civil and procedural codes to parliament |
March 1999 |
|
| |
Approval by parliament of new legislation on law enforcement agencies limiting their role to criminal cases |
June 1999 |
|
| |
Prepare a medium-term strategy on judicial and legal reform |
1999 |
WB |
|
Improve financial management |
Strengthen fiscal and financial reporting of the government |
Continuous |
|
|
|
Make fully operational mandatory procedures for government procurement |
September 1999 |
WB |
|
|
Adopt internationally accepted audit standards and establish a supreme audit institution |
1999 |
|
|
2. Tax administration and Policy |
|
Reform tax system |
Obtain parliamentary approval of the new tax code |
June 1999 |
IMF |
|
|
Move to destination principle of VAT for CIS trade |
mid-1999 |
|
|
|
Eliminate most remaining exemptions in profit and personal income taxation and introduce international accounting standards to switch VAT and the profit tax to an accrual basis |
1999-2000 |
IMF |
|
Improve tax administration |
Improve VAT refunding mechanism by ministry of finance; computerize revenue collection in STI; and, increase training for staff in Large Tax Payer’s Unit |
December 1998 - June 1999 |
IMF |
|
|
Approve legislation to allow the tax inspectorate and the social protection fund to enforce notices of levy and to seize and sell property of tax delinquents |
March 1999 |
IMF |
|
3. Financial Sector Policy |
|
Improve monetary management |
Undertake regular open market operations in treasury bills |
Continuous |
|
|
|
Allow domestic nonbank financial institutions to participate directly in treasury bill market |
1999 |
|
|
Strengthen bank supervision |
Increase frequency and quality of on- and off-site supervision with more staff and increased training by expatriates |
Continuous |
IMF |
|
|
Enforce timetable for fully achieving requirements of loan-loss provisions over 3 years (in progress) |
Continuous |
IMF |
| |
Raise banks’ minimum capital requirement: to $1.5 million
to $5 million |
January 1999–2001 |
IMF |
|
|
Review and amend use of new chart of accounts and financial reporting standards by banks |
June 1999 |
|
|
Improve banking system soundness |
Review loan portfolio of Prominvestbank and determine extent of bad loans |
March 1999 |
WB/IMF |
|
|
Submit an acceptable privatization plan for Prominvestbank |
June 1999 |
WB/IMF |
|
|
Offer International Bank for sale |
May 1999 |
WB/IMF |
|
|
Offer Savings Bank for sale |
September 1999 |
WB/IMF |
|
|
Complete privatization of Prominvestbank |
2000 |
WB/IMF |
|
|
Complete privatization or liquidation of Agroprombank |
2001 |
WB/IMF |
|
|
Allow foreign banks to increase statutory capital levels so that share of foreign capital in banking system reaches 30 percent |
March 1999 |
|
|
|
Adopt a simultaneous payment-versus-payment system (PVP) for foreign exchange transactions on BICEX |
1999 |
IMF |
|
|
Establish a fixed settlement procedures for OICEX and establish PVP system |
1999 |
IMF |
|
4. Privatization |
|
|
|
Improve transparency of privatization process |
Introduce modified auction procedures for medium-sized enterprises (mass privatization), and develop SPC procedures for the privatization of large firms |
March 1999 |
WB |
|
|
Approval by Parliament of the privatization program for 1999-2000 |
March 1999 |
WB |
|
|
Strengthen dissemination of information on privatization by increasing auction centers and bid reception sites; improve organization of voucher system and voucher pricing mechanism |
June 1999 |
WB |
|
|
Establish a securities commission by Presidential decree |
January 1999 |
|
|
|
Establish national depository system, an independent share registry, depository, and stock exchange facility |
1999 |
|
|
Deepen the privatization effort |
Prepare for sale 5 large scale enterprises using the assistance of financial advisors retained through the offering of international tender |
June 1999 |
|
|
|
Expand the role of municipal authorities to include registration of urban real estate; facilitate the establishment of an urban land market by provisioning for the privatization of the land of public enterprises slated for privatization |
March 1999 |
|
|
|
Issue regulations complementing the accounting law for enterprises to introduce international standards |
March 1999 |
|
|
|
Privatize enterprises currently under Azercontract and Auto Transport; limit the role of Azercontract to providing procurement services to ministries who lack that capacity |
June 1999 |
|
|
5. Agriculture |
|
|
|
|
Complete land allocation and the distribution of land titles to private farmers |
June 2000 |
|
|
|
Prioritization of investments in the irrigation and drainage system and formulate a medium- to long-term investment program |
June 1999 |
WB |
|
|
Establish water users’ associations and implement a cost recovery mechanism |
Continuous |
|
|
|
Establish the regulatory and legal framework for the introduction of a market based system of rural financing |
June 1999 |
WB |
|
|
Submit and complete the privatization of remaining 154 enterprises under the MOA to the SPC |
December 1999 |
|
|
|
Complete the restructuring of the MOA based on the new charter |
June 1999 |
|
|
|
Complete the liquidation of the Agroincom monopoly |
March 1999 |
|
|
|
Strengthen the system of agricultural statistics |
Continuous |
|
|
|
Encourage private farm advisory services and establish international and local linkages for research, education, and other advisory services |
Continuous |
|
|
6. Infrastructure and Petroleum Sectors |
|
|
|
Strengthen the infrastructure sector |
Expand household metering of gas consumption |
June 1999 |
|
|
|
Review all infrastructure services (including rental and transport fees) and introduce a phased plan for eliminating all generalized subsidies |
March 1999 |
WB |
|
|
Quarterly monitoring of implementation of government instructions to cut off service to delinquent customers after 60 days |
January 1999 |
|
|
|
Restructure the Caspian Shipping Company and demonopolize port and maritime services; introduce new maritime code |
December 1999 |
WB |
|
|
Complete the separation of all construction and maintenance units from the railways and roads department (Azeravtoyol) |
December 1999 |
|
|
|
Restructure Azerenergy and Azerigas to promote competition within the electricity and gas sectors, and corporatize new entities |
1999-2000 |
WB |
|
|
Establish the ministry of transportation |
March 1999 |
|
|
|
Obtain passage of the water law and establish the water commission |
March 1999 |
|
|
|
Obtain parliamentary approval for law on energy and gas; and, establish the national energy agency |
1999 |
|
|
Petroleum sector reforms |
Introduce a legal framework for investors in the oil sector, and, clearly define the government’s role in the sector |
1999 |
WB |
|
|
Complete an audit of SOCAR by international accountants |
September 1999 |
WB |
|
|
Restructure SOCAR and separate major functions |
2000 |
WB |
|
|
Prepare a detailed strategy to rationalize the oil refinery capacity |
1999 |
WB |
|
7. Interenterprise Arrears and Barter |
|
|
|
|
Avoid accumulating budgetary arrears to enterprises |
January 1999 |
|
|
|
Tax liabilities of enterprises will no longer be allowed to be offset against government liabilities; enterprises will be penalized for non-payment of taxes |
1999 |
|
|
|
To discourage barter transactions, the profit tax will be designed to apply on economic profits rather than on turnover |
1999 |
|
|
8. Environment |
|
|
|
Reverse environment degradation |
Strengthen environmental management through improved legislation, stronger enforcement, and implement priority measures as identified in the National Environmental Action Plan |
1999-2000 |
|
|
9. Trade and Exchange Regime |
|
|
|
Further liberalize the trade system |
Remove the regulation requiring pre-registration of exports |
1999 |
|
|
|
Reduce the import tariff rate from 15 to 10 percent by 2001 |
1999-2001 |
|
|
10. Reconstruction of War Damaged Areas |
|
|
|
|
Implement rehabilitation strategy consisting of voluntary resettlement, temporary support of basic necessities, and the rehabilitation of physical and social infrastructure. Cost recovery will be based on 5-year forecasts of cash income rather than actual costs. |
Ongoing |
WB |
|
11. Improve Economic Statistics |
|
|
|
|
Implement the medium-term statistical program |
Ongoing |
WB/IMF
OECD/UN |
|
|
Improve data on financial markets and external debt, publish main financial and economic indicators monthly; and publish a quarterly review of economic developments by the ANB |
1999 |
|
