Countercyclical Support Facility Program

Sovereign (Public) Project | 50145-001

The proposed Countercyclical Support Facility will, in the short term, help the government of Azerbaijan mitigate the significant negative economic impact caused by the crash in oil prices and the recession in the country's trading partners, which has triggered recession in the country. The government''s ongoing and planned fiscal stimulus expenditure is providing social assistance programs, creating employment, and promoting inclusive private sector development. The attached TA will facilitate design of structural reforms covering macro fiscal management, state-owned enterprise (SOE) reform, and finance sector development as well as augment capacity of select departments for implementation of the reforms. The medium-term structural reforms could be supported further under a planned policy-based loan in 2017.

Project Details

  • Project Officer
    Farinha Fernandes, Joao Pedro
    Central and West Asia Department
    Request for information
  • Country
    Azerbaijan
  • Modality
    • Loan
    • Technical Assistance
  • Sector
    • Public sector management
Project Name Countercyclical Support Facility Program
Project Number 50145-001
Country Azerbaijan
Project Status Active
Project Type / Modality of Assistance Loan
Technical Assistance
Source of Funding / Amount
Loan 3486-AZE: Countercyclical Support Facility
Ordinary capital resources US$ 500.00 million
TA 9259-AZE: Improving Public Sector Efficiency
Technical Assistance Special Fund US$ 1.20 million
TA 9259-AZE: Improving Public Sector Efficiency (Supplementary)
Technical Assistance Special Fund US$ 100,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Knowledge solutions
Private sector development
Sector / Subsector

Finance / Finance sector development

Public sector management / Public expenditure and fiscal management - Social protection initiatives

Gender Equity and Mainstreaming No gender elements
Description The proposed Countercyclical Support Facility will, in the short term, help the government of Azerbaijan mitigate the significant negative economic impact caused by the crash in oil prices and the recession in the country's trading partners, which has triggered recession in the country. The government''s ongoing and planned fiscal stimulus expenditure is providing social assistance programs, creating employment, and promoting inclusive private sector development. The attached TA will facilitate design of structural reforms covering macro fiscal management, state-owned enterprise (SOE) reform, and finance sector development as well as augment capacity of select departments for implementation of the reforms. The medium-term structural reforms could be supported further under a planned policy-based loan in 2017.
Project Rationale and Linkage to Country/Regional Strategy Sharp economic downturn caused by drop in oil prices. Azerbaijan''s economy has been experiencing a series of distresses, which has led to a lower growth rate, fiscal uncertainty, and finance sector instability. Oil prices have fallen sharply, by almost 57% from their peak in 2014 to August 2016. Given that oil and gas revenues account for about 30% of gross domestic product (GDP), 60% of budget revenues, and over 90% of country's exports, the crash in oil prices had a significant negative effect on the economy. All components of GDP experienced a sudden drop including government expenditures, investments, consumption and net exports. GDP growth fell from 2.8% in 2014 to 1.1% in 2015. Azerbaijan entered into recession, with negative GDP growth of 3.0% in the first 7 months of 2016 and a negative 2.4% forecast for 2016. The recession stems from lower hydrocarbon revenues, contraction in public investments (especially construction effecting private sector activity), and a tightened domestic demand. The current account surplus evaporated from 14.0% of GDP at end-2014 to a deficit of 0.4% at end-2015. Lower commodity prices resulted in a 47% decrease in export revenues in 2015, while the inflow of remittances (mainly from the Russian Federation) suddenly dropped by 31% to $1.2 billion hitting, in particular, the rural population. The currency devaluation of major trading partners put substantial pressure on the national currency manat with a sharp decline in foreign exchange supply. Assets of the State Oil Fund of Azerbaijan (SOFAZ) declined by $3.5 billion to $33.6 billion (9.5%) in 2015, limiting the fiscal space for budget transfers and leading to a reduction in economic activities financed by SOFAZ.
Impact Broad-based inclusive growth sustained (Azerbaijan 2020: Look into the Future)
Project Outcome
Description of Outcome Expenditures for fiscal stimulus maintained
Progress Toward Outcome To be assessed.
Implementation Progress
Description of Project Outputs

Measures to provide social safety net to citizens implemented

Measures to facilitate social housing implemented

Measures to create additional jobs implemented

Measures to identify and initiate specific structural reforms for economic diversification implemented

Status of Implementation Progress (Outputs, Activities, and Issues) To be assessed.
Geographical Location Nation-wide
Safeguard Categories
Environment C
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects Categorized as 'C' since the project is not expected to have impacts on Environment.
Involuntary Resettlement Categorized as 'C' since the project is not expected to have impacts on Involuntary Resettlement.
Indigenous Peoples Categorized as 'C' since the project is not expected to have impacts on Indigenous Peoples.
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
Consulting Services There are no consulting services needed under the loan. Under the attached technical assistance, a total of 18 person-months of international consultancy services and 33 person-months of national consultancy services will be required intermittently. A consulting firm has been recruited in recruited and fielded in June 2017. The firm's inception report was received by ADB in September 2017. The interim report was approved in April 2018, while the midterm report was submitted in September 2018.
Procurement There are no procurement activities required under the loan.
Responsible ADB Officer Farinha Fernandes, Joao Pedro
Responsible ADB Department Central and West Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, CWRD
Executing Agencies
Ministry of Finance
[email protected]
83, Same Vurgun Street AZ1022 Baku, Azerbaijan
Timetable
Concept Clearance 21 Jul 2016
Fact Finding 19 Jul 2016 to 27 Jul 2016
MRM 29 Aug 2016
Approval 07 Dec 2016
Last Review Mission -
Last PDS Update 28 Sep 2018

Loan 3486-AZE

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
07 Dec 2016 08 Dec 2016 23 Dec 2016 28 Feb 2017 - 02 Feb 2017
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 500.00 Cumulative Contract Awards
ADB 500.00 07 Dec 2016 500.00 0.00 100%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 07 Dec 2016 500.00 0.00 100%

TA 9259-AZE

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
07 Dec 2016 03 Jan 2017 03 Jan 2017 31 Jan 2019 31 Jan 2021 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
1,300,000.00 0.00 0.00 0.00 0.00 0.00 1,300,000.00 07 Dec 2016 1,256,559.65

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

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Safeguard Documents See also: Safeguards

Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

None currently available.

Evaluation Documents See also: Independent Evaluation

Title Document Type Document Date
Azerbaijan: Countercyclical Support Facility Program Validations of Project Completion Reports Oct 2020

Related Publications

None currently available.


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Tenders

No tenders for this project were found.

Contracts Awarded

No contracts awarded for this project were found

Procurement Plan

None currently available.