WB considers $35 mln allotment for new agricultural project in Azerbaijan

By AzerNews

The World Bank is considering allocation of funds worth $35 million under a new agricultural project in Azerbaijan. The WB Board of Directors is expected to approve the project on July 20.

The bank said the total cost of the Agricultural Competitiveness Improvement Project will amount to $59 million. The WB will finance the project through the International Bank for Reconstruction and Development (IBRD), a WB lending arm.

The project is designed to facilitate agricultural producers' access to markets by improving sanitary and phytosanitary services, providing financial services to agricultural enterprises, etc. The project will contribute to the further development of the agricultural business and the food industry by providing loans for improving technologies, increasing production volume, modernizing phytosanitary and veterinary services. The project will also contribute to the improvement of the regulatory and institutional framework on food safety and quality.

Earlier the Azerbaijani government said it needs a project that would examine the entire chain -- from the producer to the consumer, indicating all the shortcomings of this chain.

Agriculture is a meaningful component of Azerbaijan's non-oil economy and has significant potential for boosting export revenues for the country. It is a key source of jobs, as 38 percent of the population is employed in agriculture and this sector is a priority in the context of food security.

The WB completed the second phase of the program on the development and crediting of agriculture in Azerbaijan in February, and a relevant loan agreement was signed in fall 2006. This project served to the increase of farmers' revenues and agricultural productivity.

Azerbaijan Rural Investment Project (AzRIP-2) came into force at the end of last year. It is based on the results of the first such project, which had increased the incomes of 600,000 farmers and improved irrigation services for 700,000 people, providing 150 villagers with quality drinking water. The project covers five main areas of the plain Shirvan, Mugan-Salyan, Nakhchivan, and the northern and northwestern regions of the country.

The current strategy of the WB's cooperation with Azerbaijan covers the period 2011-2014. It is based on such priorities as boosting the non-oil sector, including development of infrastructure and agriculture. In addition, the bank's activities are focused on improving the effectiveness of social services, including health, education, social security and water supply.

Currently the WB is working with the Azerbaijani government in two areas - the development of new projects and stepping up work under the existing project portfolio.

Since establishing cooperation with Azerbaijan in 1992, the WB has financed 56 projects in various sectors of the economy for a total of $3.4 billion in loans and grants of the International Development Association (IDA) and the International Bank for Reconstruction and Development (IBRD). During this period, the WB has allocated $42 million to Azerbaijan for the development of projects and feasibility studies and the organization of training.