European union delegation to the Republic of Azerbaijan

2) ENPI assistance 2007-2013 - €68m + €75m

The National Indicative Programme (NIP) for the period 2007-2010 foresaw an indicative budgetary allocation of €92m, although only €68m were committed. The follow-up NIP for 2011-2013 foresaw an indicative budgetary allocation of €122.5m, but reductions applied due to the cancellation of a budget support programme on Public Finance Management (PFM) under AAP 2012 and further cuts under AAP 2013, resulting in a final commitment of only €76m for the NIP 2011-2013.

This allocation includes €19m for the Comprehensive Institution Building (CIB) Programme, intended to assist a limited number of core institutions central in preparing for and implementing on-going and future Agreements under the Eastern Partnership and €9m for the PRDP (Pilot Regional Development Project).

The main instruments for implementing the ENPI assistance are Budget Support and Twinning.

Budget Support and accompanying Technical Assistance (€64m)

Since 2007, the EU has committed funds to four budget support programmes, namely: €14m for Energy in 2007; €16m for Justice in 2008; €14m for Agriculture in 2009; and €20m for Regional Development in 2011.

Bureaucratic administrative procedures and difficulties in assessing PFM eligibility have resulted in significant delays in initiating the BS programmes, although they are now picking-up: to date, regular annual payments were made under the Energy and Justice Programmes, and a first payment under Agriculture. In 2012, €11,6 m were disbursed in budget support to the Government of Azerbaijan out of total €19,5 m.

The €20m Rural Development Budget Support Programme developed under AAP2011 will begin this year. Its purpose is to develop labour and entrepreneurship potential in rural areas so as to meet demand of rural businesses to accelerate their integration in the world economy.

During 2012, a significant setback was experienced with the €22,5M Public Policy Reform Programme SPSP foreseen under AAP2012. Developed in close consultation with the Government as a means to ensure a long term PFM reform process, unexpectedly, the Government refused to endorse the programme at the last minute, leading to its cancellation and loss of the funds.

This setback has also had the impact of cancelling the Budget Support component initially foreseen in AAP2013, and has led to a loss of those funds as well.

Twinning (€24m)

The Twinning instrument continues to be very successful, with one of the highest implementation rate in the Region. Currently 27 twinning projects (including a Twinning light project) are under different stages of implementation: eight have been completed, eleven are on-going and 10 under preparation. During 2012, five Twinnings were signed and with one expected to be signed in Q1 2013. Twinning fiches for six projects to be financed under AAP 2010 are under development. Identification of a further nine projects to be funded under AAP2011, is ongoing. Some 34 applications were received for TAIEX in 2011 against 20 received in 2010, showing a better understanding and use of the instrument by the AZ authorities.

An evaluation of the Twinning instrument in Azerbaijan was carried-out in 2012, confirming the positive results highlighted above. The evaluation made also some detailed recommendations on how to further improve the political relevance and the effectiveness of the instrument in the AZ context.
Comprehensive Institution Building programme (CIB)

The CIB supports the implementation of the new agreements offered under the Eastern Partnership, and is based on three Institutional Reform Plans (IRPs), the first of which focuses on deepening trade integration & on the Association Agreement (IRP1); the second on rule of law, human rights & migration (IRP2), and the third one on training of civil servants on EU affairs (IRP3). A total €19m has been allocated to the CIB in 2011-2013, with a first €3m earmarked under AAP2011 (signed in 2011) and another €7m under AAP 2012.

In terms of current status, IRP1 is at the final stage of approval with Government adoption expected in early 2013. IRP2 was approved by the GoA in July 2012, and IRP3 was approved in April 2012. At this stage activities have only begun under IRP3, where a FWC to support the Beneficiaries (Azerbaijan Diplomatic Academy and Civil Service Commission) in IRP3 implementation has started in October 2012.

Pilot Regional Development Programme (PRDP)

The PRDP instrument promotes regional development in Azerbaijan along the lines of EU regional cohesion policy, with a focus on reduction of disparities between regions. With a €9M budget for 2011 - 2013, its objective is to finance projects in line with a country's regional development strategy, or if the strategy lacks sufficient quality, support development of it. In October 2012, a techical assistance project has started with the aim of assisting the Ministry of Economic Development in advancing the regional development agenda and in designing the various component of the PRDP programme.