Business

Azerbaijan, IMF agree economic reform program for 2003
The International Monetary Fund and the Azerbaijani government have coordinated a program for the main avenues economic reform in 2003, head of the IMF mission and deputy chief of the IMF European II Department John Wakeman-Linn announced at a press conference in Baku.
According to this program, he said, with an eye toward boosting parliamentary control over the activities of the State Petroleum Fund there will be introduced changes and additions to the country's law on the budgetary system. The upshot of these changes will be the parliament gaining the right to confirm the fund's consolidated budget, on which the IMF has insisted.
Yet another agreement with the Azerbaijani government is for preparing a strategy for long-term management of oil and gas revenues made from projects for oil pipeline building along the Baku-Tbilisi-Ceyhan route and putting the Shah-Deniz gas deposits into production.
The economic reform program also envisions working up a time-table for the privatization of the International Bank of Azerbaijan and United Universal Joint-Stock Bank, management of public funds, improvement of tax management, continuing reforms with the State Customs Committee and division of its regulatory and commercial functions.
Wakeman-Linn said that the IMF is prepared to support the reform program at talks between the government and the Fund's executive board set for May 14 in Washington.
He noted that Azerbaijan could count on receiving by as early as May the second tranche of $17 million under the Poverty Reduction and Growth Facility (PRGF) loan.
According to him, the IMF will then allocate the second credit tranche in the same amount in September, if works progress as scheduled.
On the other hand, Wakeman-Linn emphasized that the IMF still takes a dim view of the differentiated property tax rates among regions and sectors. He noted that parliament had voted for changes and additions to the country's Tax Code that stipulate the application of differentiation on property taxes.
Tax rate
The International Monetary Fund (IMF) and the Azerbaijani government have agreed on the issue of regionally differentiated profit tax rates. John Wakeman-Linn, the visiting IMF European Department II official, has told the media that the government will analyze this question during the first half of the year to make a decision on whether to reconsider the profit tax rate or not.
History
As reported earlier, the IMF issued in late 2002 an announcement of the absence of mutual understanding with the Azerbaijani government as to the PRGF program.
In particular, the Fund insists on the preparation and passage of law on the State Petroleum Fund of the Azerbaijani Republic, according to which fund spending would be confirmed by the legislature. Also, the IMF is against the use of State Petroleum Fund monies for building the Baku-Tblisi-Ceyhan pipeline, considering the project a commercial one, therefore running against the rules for using the fund's money.
In July of 2001, the IMF board of directors gave the go-ahead to the three-year PRGF program, which envisions Azerbaijan getting $100 million all told. The country has already received two tranches of $10 million each. The differences between the Azerbaijani government and an IMF mission caused finance for the state program on poverty reduction and economic growth to be suspended.
During further talks a consensus was reached. If fulfilled, then the IMF will reopen the credit tranche, according to John Wakeman-Linn.

BTC talks in Almaty ends Kazaxstan
The latest round of talks on Kazakhstan joining the Baku-Tbilisi-Ceyhan (BTC) oil pipeline project have been completed in Almaty.
Representatives of the BTC consortium companies also attended the talks. KazMunayGaz executive director for transport structures Kairgildi Kabildin and SOCAR president Natiq Aliyev expressed their opinions about the project before discussing the main principles of the agreement such as problems arising from setting up of the Aktau-Baku transport corridor.
Also discussed was funding of the BTC and Baku-Aktau projects, legal aspects of documents being prepared, security of the projects, taxation and customs, environmental protection, etc.. it was noted that transportation of the Kazakh oil  through the BTC pipeline will allow the project to operate at full capacity. Natiq Aliyev said 15m tones of crude is currently being extracted in Azerbaijan, including 9m tones by SOCAR and 6m by foreign oil companies. 50m tons of oil will be extracted in Azerbaijan between 2008-2010.
The signing of a protocol concluded the talks. Natiq Aliyev has told journalists that preparation of the intergovernmental treaty will be completed before the end of the year. In addition, foreign oil companies operating in Azerbaijan and Kazakhstan and wanting to export their oil through the BTC pipeline will also have to sign treaties with the governments of these countries. Following the signing of these document, it will be known under which conditions and terms Kazakhstan joins the BTC project.

10 per cent of population insured
The State Insurance Company Azersigorta collected AZM19.6bn on 32 insurance services in 2002, which has rocketed compared to the 2001 figure estimated at AZM2bn. The company conducted insurance payments totaling AZM2.6bn, according to Azersigorta chief Mammad Mammadov, who held a news conference at the ruling New Azerbaijan Party's office on Friday.  He said for the sake of comparison that 31 insurance companies active in Azerbaijan received funds worth AZM204bn altogether in 2002. He pointed out that the company insured 25 per cent of vehicles in the country. Mammadov added 10 per cent of the Azerbaijani population has bought life and property insurance. Azersigorta is planning to bring the present charter fund of AZM6bn to AZM10bn before the end of the year, according to Mammadov. Furthermore, he said that building insurance tariffs would be lowered to offer assistance to entrepreneurs.At the moment, this figure is 0.5-2 per cent for entrepreneurs and 1 per cent for citizens.
Deceased servicemen families
State Insurance Company Azersigorta has applied to the government to increase the amount of insurance funds for families of servicemen. Head of the company Mammad Mammadov has told AssA-Irada that the government could raise this amount valued at AZM5.5m to date. Mammadov said that families of servicemen died after the cease-fire had also received insurance funds, though he withheld information about their number.

CHF International arrange workshop and trade fair for farmers
Over 90 farmers, processors and service providers from across Azerbaijan attended CHF International's recently arranged workshop and trade fair on the animal husbandry sector in Imishli, a town in southern Azerbaijan.
Following the announcement, Azad Rasulov, CHF Program Director told Azernews that the idea of holding the event came from the farmers themselves. "They advocated to come together to address constraints that they face collectively such as weak feed system for animal, lack of productive animal types, lack of quality veterinary services, weak access to service providers and processors, and high barriers to entry into markets," he said.
The event included discussions on the challenges and opportunities existing within the sector and concluded with an exhibition of animal byproducts including feed and veterinary medications and Baku-based service providers such as Iskender Gida, MPro of National Milk Processors Association, and Veterinary Medicines Supply Department of Ministry of Agriculture. Many ideas were promoted through the event to strengthen the sector as a whole in Azerbaijan. Ramiz Mammadov, ACDI/VOCA's client and feed specialist suggested that small mixed feed production units be set up jointly in order to enrich the feed composition that is essential for higher productivity.
Over 50 business linkages across regions were facilitated as a result of the event.  CHF's Business and Market Price Analysis Directory that provides detailed contact information on agricultural businesses in the region and in-depth analysis of market price information for 2001-2002 was on sale at the event. The CHF-facilitated Regional Handicrafts Association that includes up to 400 artisans from across the region took advantage of the opportunity to market their goods at the event as well.  In order to promote incentives, winners of various contests were selected.
CHF International is funded by the United States Agency for International Development (USAID). Through the Mercy Corps-managed Azerbaijan Humanitarian Assistance Program, CHF has been working for two and half years to improve business environment and strengthen community-based businesses in the southern conflict-affected area of Azerbaijan.

IDB to hold roundtable in Baku
The Islam Development Bank (IDB) and Arab economic funds are due to conduct a conference with the Azerbaijani government in Baku over March 25-27. Projects to be discussed at the conference will be included in the 2003-2005 cooperation program between Azerbaijan and the bank. The projects comprise energetics, road construction, updating the sewage system of the Naxcivan Autonomous Republic. Thus far, the IDB has allocated $3.28-m in financial assistance to Azerbaijan, which covers projects like the construction of a hangar at Baku Airport, preparation of afeasibility study for the revamping of the Lankaran cannery, drawing up a reconstruction scheme for the Samur-Abseron irrigation system, preparation of the project on the Alat-Qazimammad automobile road construction, etc..

New services from Azercell
Azercell Telecom JV, the leader of cellular communication of Azerbaijan, continuing to please its subscribers, is introducing a new service, ZengEtCELL. Now thanks to the ZengEtCELL service, even those subscribers, who have insufficient contours to call, are still capable of contacting other subscribers. The completely free service allows subscribers to send an SMS to number 7700 containing an adressee's cell phone number, after that an Azercell subscriber, whose number was indicated in the message, will receive information, 'Subscriber xxx-xx-xx (phone number from which the message was sent ) is asking you to call them'. A subscriber can use this service three times a day. Considering that the service is free of charge, in exceptional cases, for example at overloaded network service may be temporarily restricted. Service is rendered only for Azercell Telecom subscribers and is not valid for customers of other operators. Today Azercell, rendering communication services based on advanced technologies, also takes into account the means of all population groups of Azerbaijan, and the last introduced services are the fine example of that. Thus, ZengEtCELL service is a continuation of Azercell's policy aimed at satisfaction of all demands of cellular communication users.

IFES embarks on Micro-grants project
The International Foundation for Election Systems (IFES) Azerbaijan office has embarked on the second phase of the Micro-grants project. According to the foundation, the grants worth $500-2,000 will be offered to projects supporting community-based development. Groups, consisting of citizens and one municipality representative. The Ahmadli, Xatai and Yasamal districts of Baku, the Kapaz district of Ganca, the Xanarab village of Barda, Ismayilli, Masalli, and Mingacevir regions will be eligible to receive grants. The program is to encourage citizens and municipality members to become jointly involved resolving problems troubling their communities.

Gov’t approves Tax list
The Azerbaijani Cabinet of Ministers has approved the list of highland regions, where favorable profit tax will be applied. The list includes 39 districts of Azerbaijan and seven administrative units of the Naxcivan Autonomous Republic. Under the document, highland is defined as areas located 200 meters or more above sea level.
Earlier, the profit tax rate was lowered from 27 per cent to 25 in Baku since January 1, 2003. Meanwhile, this rate was defined at 20 per cent for Ganca, Sumqayit and Alibayramli, 10 per cent for highland districts and the Naxcivan Autonomous Republic of Azerbaijan, 15 per cent for the remaining areas of the country.

Cabinet to investigate communication dispute
The Ministry of Communication shutting down the access of AzEuroTel JV-operated telephone stations 92 and 97 to international channels on March 1 has made long-running tensions between the company and the ministry even worse. The parties have been flinging accusations at each other through the media. In its statement, the ministry says AzEuroTel has deliberately limited international accesses via the Aztelekom Production Union thereby violating the rights of customers and in this regard AzEuroTel's General Director Nuru Ahmadov has been instructed to return the closed communication channels to work. In the meantime, AzEuroTel argues that by spreading information of this kind while the Cabinet of Ministers is setting up a special commission to investigate the issue, the ministry puts pressure on the company's management and members of the commission.

Int’l Tourism Exchange in Berlin
Four companies from Azerbaijan, including Grand Europe and Crescent Beach hotels, Improtex Travel and Azarxariciturizm travel agencies, attended the International Tourism Exchange (ITE) held on March 7-11 in Berlin. The Azerbaijani Ministry of Youth, Sport and Tourism told AssA-Irada that at the exhibition, which is considered the leading specialized event in the international tourism business, a stand totaling 52sq.m were allocated to Azerbaijani companies. Participants in the exhibition have received comprehensive information on Azerbaijani tourism infrastructures. The Azerbaijani delegation also took part in the workshop organized by the World Tourism Organization.

Memorandum signed
At a meeting by Minister of Economic Development Farhad Aliyev with the visiting mission of the Islamic Development Bank (IDB), it was decided to present a number of projects to the IDB shortly. These projects cover reconstruction of the Xacmaz power sub-station, technical assistance in preparing a feasibility study of the Mingacevir thermal power complex ninth unit, construction of the Ucar-Yevlax-Ganca road, etc.. As a result of talks, a memorandum of understanding was signed between the Azerbaijani government and the IDB mission.
The ministry's press service has informed AssA-Irada that the delegation familiarized itself with the progress of IDB-funded projects in Azerbaijan.