Azerbaijan : Second Improving Governance and Public Sector Efficiency Program (Subprogram 1)
The proposed Second Improving Governance and Public Sector Efficiency Program (IGPSEP II) aims to support Azerbaijan's transition to a more stable, inclusive, environmentally sustainable, and diversified market economy by (i) strengthening fiscal management, (ii) improving the governance and operations of state-owned enterprises (SOEs), and (iii) deepening private sector participation and green economy initiatives. The program is aligned with the country partnership strategy for Azerbaijan, 2019-2023 of the Asian Development Bank (ADB) and the operational priorities of ADB's Strategy 2030: (i) addressing remaining poverty and reducing inequalities; (ii) accelerating progress in gender equality; (iii) tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability; and (iv) strengthening governance and institutional capacity.
Project Details
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Project Officer
Akin, Cigdem
Sectors Group
Request for information -
Country/Economy
Azerbaijan -
Sector
- Public sector management
| Project Name | Second Improving Governance and Public Sector Efficiency Program (Subprogram 1) | ||||||||
| Project Number | 51059-004 | ||||||||
| Country / Economy | Azerbaijan |
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| Project Status | Proposed | ||||||||
| Project Type / Modality of Assistance | Loan Technical Assistance |
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| Source of Funding / Amount |
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| Operational Priorities | OP1: Addressing remaining poverty and reducing inequalities OP2: Accelerating progress in gender equality OP3: Tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability OP6: Strengthening governance and institutional capacity |
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| Sector / Subsector |
Finance / Inclusive finance - Small and medium enterprise finance and leasing Public sector management / Public expenditure and fiscal management - Reforms of state owned enterprises |
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| Gender | Some gender elements | ||||||||
| Description | The proposed Second Improving Governance and Public Sector Efficiency Program (IGPSEP II) aims to support Azerbaijan's transition to a more stable, inclusive, environmentally sustainable, and diversified market economy by (i) strengthening fiscal management, (ii) improving the governance and operations of state-owned enterprises (SOEs), and (iii) deepening private sector participation and green economy initiatives. The program is aligned with the country partnership strategy for Azerbaijan, 2019-2023 of the Asian Development Bank (ADB) and the operational priorities of ADB's Strategy 2030: (i) addressing remaining poverty and reducing inequalities; (ii) accelerating progress in gender equality; (iii) tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability; and (iv) strengthening governance and institutional capacity. The program is designed under a policy-based lending modality, with two subprograms. The programmatic approach has been chosen as the appropriate modality for logically sequencing structural reforms under a multiyear framework, involving several agencies, as it provides flexibility for dynamic changes in the policy and macroeconomic environment. While subprogram 1 focuses on improving the legal, regulatory, and institutional framework, subprogram 2 supports measures for (i) effective and transparent fiscal and debt management, (ii) professional management and improved performance of SOEs, (iii) promotion of private sector development and access to finance, and (iv) climate-sensitive policy-making and green economic activities. The subprograms will improve the allocative efficiency of public and private resources. |
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| Project Rationale and Linkage to Country/Regional Strategy | The proposed IGPSEP II deepens the reforms under the IGPSEP related to rules-based fiscal planning, strengthening of SOE restructuring and private sector participation, and improving access to finance and the business environment. Its design incorporates lessons from ADB's SOE reforms under the earlier program and other policy-based lending, which emphasize (i) improving the effectiveness of antimonopoly mechanisms and creating an enabling business environment, (ii) strengthening professional management and oversight of SOE performance, and (iii) enhancing the transparency of SOEs' finances. Key value additions are strengthened rules-based fiscal and debt management policy, gender-responsive budgeting, climate budgeting, IT-based applications in PFM and improved domestic resource mobilization and tax compliance in line with international standards. The program introduces innovative reforms such as e-mobility plan, green financing, and national adaptation plans for a green economy. The program strengthens the competition framework and SOE governance under AIH through KPIs, the transparency of SOE finances and their fiscal impact, professional management, and control systems. Under the One ADB approach, the program will collaborate with (i) ADB's Office of Public-Private Partnership on the PPP framework, (ii) ADB's Sustainable Development and Climate Change Department on green economy initiatives, and (iii) ADB's transport and energy divisions on the e-mobility plan. The IGPSEP II deepens the achievements under the earlier program on access to finance for SMEs, with additional focus on the SME Investment Fund and gender-responsive financial inclusion and regional development. It complements ADB's ongoing support for regional connectivity, PPPs, renewable energy, rural financial inclusion, and technical and vocational education. ADB TA has contributed to the design and implementation of government reforms on PFM, SOEs, and SMEs and built capacity for their sustainability. The program has been effectively coordinated with development partners, including the policy dialogue with IMF, and it complements their activities. | ||||||||
| Impact | |||||||||
| Outcome | |||||||||
| Outputs | |||||||||
| Geographical Location | Nation-wide | ||||||||
| Safeguard Categories | |
|---|---|
| Environment | C |
| Involuntary Resettlement | C |
| Indigenous Peoples | C |
| Summary of Environmental and Social Aspects | |
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| Environmental Aspects | |
| Involuntary Resettlement | |
| Indigenous Peoples | |
| Stakeholder Communication, Participation, and Consultation | |
| During Project Design | |
| During Project Implementation | |
| Responsible ADB Officer | Akin, Cigdem |
| Responsible ADB Department | Sectors Group |
| Responsible ADB Division | Public Sector Management and Governance Sector Office (SG-PSMG) |
| Executing Agencies |
Ministry of Finance |
| Timetable | |
|---|---|
| Concept Clearance | 28 May 2023 |
| Fact Finding | - |
| MRM | - |
| Approval | - |
| Last Review Mission | - |
| Last PDS Update | 31 May 2023 |
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| Title | Document Type | Document Date |
|---|---|---|
| Second Improving Governance and Public Sector Efficiency Program (Subprogram 1): Concept Paper | Concept Papers | May 2023 |
| Second Improving Governance and Public Sector Efficiency Program (Subprogram 1): Initial Poverty and Social Analysis | Initial Poverty and Social Analysis | May 2023 |
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