(MENAFN- AzerNews)
![EBRD](https://menafn.com/updates/pr/2024-06/14/A_8fa0362b-5_Image_In_Body.jpg)
Nazrin Abdul
Read more
Over the past 30 years, Azerbaijan and the European bank for
Reconstruction and Development (EBRD) have established a robust
partnership. The EBRD has significantly supported Azerbaijan in its
economic transformation and diversification efforts, with over 3
billion euros financed for various projects in the country.
Notably, half of this funding is allocated to the private
sector.
Azerbaijan has implemented 13 infrastructure projects through
state companies, with substantial backing from the EBRD.
Additionally, the bank has provided crucial support for the
country's energy projects, including the Southern Gas Corridor and
the Trans Adriatic Pipeline (TAP), the latter receiving 1 billion
euros in financing from the EBRD.
The recently unveiled EBRD Transition Report for 2023–2024
provides a comprehensive assessment of Azerbaijan's economic
outlook and structural reforms.
Regarding diversification of the economy, EBRD is actively
involved in supporting the development of Azerbaijan's private
sector, particularly in non-oil industries, while emphasising the
need for improved governance in private and state-owned
enterprises.
As reported by Azernews , citing the bank, it
provides key insights concerning developments, especially EBRD's
focus Areas in Azerbaijan.
Access to Finance: Efforts are underway to enhance access to
finance for local businesses, with a focus on encouraging lending
by banks and non-bank financial institutions. Initiatives are also
aimed at developing local currency and capital markets to bolster
economic growth.
Green Economy: Azerbaijan's transition towards a green economy
is receiving support from EBRD, with financing allocated for
renewable energy projects, increased energy efficiency measures,
and the promotion of cleaner transport and sustainable
infrastructure.
Donor Contribution: Azerbaijan also serves as a donor to EBRD,
with a total contribution of €3.6 million. Half of this
contribution is allocated to the Eastern Europe Energy Efficiency
and Environment Partnership (E5P) Fund, while the remaining half is
directed to the Azerbaijan – EBRD Cooperation Account.
Economic Dynamics and Challenges
Economic Growth Moderation: The report highlights a moderation
in economic growth in 2023, with the non-oil sector experiencing a
slowdown. Factors such as lower energy prices, declining oil
production, and sluggish growth in the non-oil sector have
contributed to a GDP growth rate of less than 1 per cent in the
first seven months of 2023.
Support for IT Sector: There is a growing emphasis on supporting
the development of the information technology (IT) sector and
digitalization of the economy. New tax legislation provides
incentives for IT companies and employees, while the capital market
is benefitting from a new digital platform facilitating online
securities issuance.
Middle Corridor Development: Significant strides are being made
to develop the Middle Corridor trade route and promote renewable
energy. Azerbaijan is collaborating with Kazakhstan and Georgia to
coordinate cross-border energy transmission and non-oil goods
transport along the corridor.
Structural Reform Agenda
Economic Diversification: Structural reforms are crucial for
diversifying Azerbaijan's economy, with an emphasis on
strengthening the regulatory framework to encourage competition and
reduce the state's influence across various sectors.
Renewable Energy Market: Reforms are needed to enhance the
legislative and regulatory frameworks for the renewable energy
market, including measures to control monopolies and attract
foreign investment.
Middle Corridor Capacity: Enhancing the institutional capacity
of state-owned infrastructure companies along the Middle Corridor
and streamlining tariff unification and customs procedures with
partner countries are identified as key priorities.
Macroeconomic Developments
Growth Slowdown: After two years of robust growth, Azerbaijan's
economy has experienced a slowdown, attributed to declining oil
output and inflationary pressures. However, energy exports are
expected to continue driving short-term growth.
Transition to Green Energy: The government's focus on green
energy transition is evident, with collaborations underway for the
joint development and transmission of green energy through
international partnerships.
Digitalization and Employment Opportunities: Digital
initiatives, such as the launch of an online securities issuance
system, are contributing to capital market development.
Additionally, recent reforms have broadened employment
opportunities for women by lifting restrictions on hazardous
jobs.
As Azerbaijan navigates through economic challenges and pursues
structural reforms, collaborations with international partners and
targeted investments in key sectors are expected to play a pivotal
role in driving sustainable growth and economic
diversification.
This analysis of the EBRD Transition Report underscores the
importance of strategic interventions and policy reforms in shaping
Azerbaijan's economic trajectory in the coming years.
It should be noted that Azerbaijan became a member of the EBRD
on September 25, 1992. Representing the Republic of Azerbaijan at
the EBRD is Minister of Economy, Mikayil Jabbarov, with Minister of
Finance, Samir Sharifov, serving as the alternate leader.
The collaboration between the Bank and Azerbaijan is governed by
the Country Strategy Document for the period 2019-2024. This
strategic framework prioritizes financing projects in the following
areas:
- Facilitating economic diversification through support for
competitiveness and good governance.
- Enhancing resilience by fostering the development of financial
markets.
- Promoting the transition to a green economy and fostering
regional connectivity.
Investments in Azerbaijan total €3.108 billion euros across 177
projects. Additionally, the State Oil Fund of the Republic of
Azerbaijan is a contributor to the Equity Participation Fund
established by the EBRD, with a capital contribution of €100
million out of the fund's total value of €350 million.
MENAFN14062024000195011045ID1108332100
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.