Currently, the global economy is “frozen”—demand and supply are contracting simultaneously, unemployment is rising, the pandemic threatens humanity, and stock and commodity markets, especially oil prices, have collapsed. Vusal Gasimli, Executive Director of the Center for Analysis of Economic Reforms and Communication (CAERC), stated that according to McKinsey’s calculations, global economic contraction this year will reach 4.7%, 9.7% in the Eurozone, 2.7% in China, and 8.4% in the United States:

“At best, the global economy may only return to pre-crisis levels by the third quarter of 2022. In other words, according to Nassim Taleb’s ‘Black Swan’ theory, the coronavirus crisis could not have been predicted even three months in advance, yet the world rapidly entered the 21st century’s most severe crisis. Azerbaijan faced global shocks precisely as the economy’s growth trend, which began in 2017, was reaching a peak. The Azerbaijani government is addressing the consequences of global shocks and the pandemic at a time when the global economy is setting new anti-records. Under the motto ‘We Are Strong Together,’ President Ilham Aliyev has mobilized all segments of society and resources to fight the crisis. In history, slogans that unite people have ranged from ‘Liberty, Equality, Fraternity’ in France to ‘In God We Trust’ in the U.S., ‘Fatherland First’ in Mexico, and ‘Faith, Unity, Law’ in Pakistan.”

Azerbaijan’s anti-crisis program amounts to 2.5 billion manats, equivalent to 3.1% of GDP. For comparison, Georgia’s government adopted a 1-billion-lari package (2% of GDP), Russia a 300-billion-ruble package (0.3% of GDP), and Turkey a 100-billion-lira package (2% of GDP). Kyrgyzstan allocated 1% of GDP (9.4 million USD), Uzbekistan 1.5% of GDP (1 billion USD), and Spain 0.7% of GDP (8.9 billion EUR). Azerbaijan’s program is therefore substantial and significant compared to other countries.

To mitigate the impact of global shocks, the government’s support program will cover four affected sectors and 20 operational areas. A Working Group under the Minister of Economy assessed the damage in three categories: most affected, significantly affected, and minimally affected. This approach ensures fairness, targeted assistance, and efficient use of resources. Nine program projects have been developed within this framework. The first targets 44,000 entrepreneurs and 304,000 salaried employees. Considering that nearly 915,000 of Azerbaijan’s 1.6 million salaried employees already receive regular wages in the public and oil sectors, state support will cover 304,000 of the remaining 640,000 employees. Assistance will correspond to the sector’s level of damage, based on an average wage benchmark of 712 manats.

In addition, 290,000 micro-entrepreneurs will benefit from state support, calculated based on taxes paid in 2019. Programs have also been developed for tax relief, tax deferrals, and support for mortgage payments.

Under global shocks, the state plans to support both households and some entrepreneurs in meeting credit obligations. Of the current 15.5-billion-manat credit portfolio, 7 billion manats belong to households and 6.1 billion manats to the private sector. Particularly affected sectors—trade and services—have received 2.4 billion manats, and transportation and communication sectors 1.2 billion manats. The government will allocate 1 billion manats to support the existing credit portfolio, prioritizing affected sectors and credit discipline. The Entrepreneurship Development Fund will cover 10% of loan interest, which represents a significant portion, as average credit rates are 14% overall, 8.8% for legal entities, and 16.6% for individuals. The new loan support program will cover loans with an annual interest rate up to 15%, with half of the interest paid by the Fund.

Within the framework of state support programs, utility limits will be raised, and systemically important enterprises in passenger transport—AZAL, BNA, Metro, railways, etc.—will also receive assistance.

Furthermore, the government will expand the scope of social programs to support low-income citizens. A Working Group under the Minister of Labor and Social Protection will soon present relevant proposals.

Thus, under the leadership of President Ilham Aliyev, Azerbaijan is implementing the largest economic support program in its history of independence. Such a systematic program will minimize the impact of the century’s largest pandemic on the country and prepare it for the post-coronavirus period. Both demand and supply will be supported through state programs, ensuring macroeconomic stability. During these times, it is crucial to strictly adhere to special quarantine rules, because economic losses can be restored, but health and human life cannot. For the Azerbaijani state, the citizen and their dignified life remain the top priority.”