Azerbaijan overview

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Cityscape at night

In Azerbaijan we focus on:

Promoting market-driven economic diversification. The EBRD will support leading local corporates with direct financing while helping our partner banks to remain active in the corporate segment through MCFF. In the MSME sector the EBRD will place a special emphasis on the agribusiness sector, and will support local banks to develop their capacity to support agricultural and regional lending. Our continued support for regional roads will also help facilitate the development of a viable agricultural sector while facilitating integration of smaller communities.

Developing a sustainable financial sector to support private sector development. The EBRD will aim to strengthen financial intermediation to ensure efficient financing of the private sector, particularly SMEs and MSEs, including in the regions.We will promote high standards of corporate governance and risk management, which should contribute to increased competition, setting new standards and opening new markets for banks, and will support consolidation in the banking sector through potential equity investments. The EBRD will extend its co-operation with existing partner banks and assist in the development and promotion of new financial instruments to target improved access to finance for women-owned and women-run businesses, and will aim to promote energy efficiency investment projects through local banks via the Caucasus Energy Efficiency Programme.To develop local capital markets, we will seek to bring corporate (non-FI) issuers to the corporate bond market and expand the institutional and retail investor base.

Improving governance and the business environment. In order to support the authorities’ goals of promoting competition and improving the business environment, the EBRD will prioritise engagement with private and public sector clients who can demonstrate commitment to high standards of corporate governance and transparency and who have a commitment to improving management practices. In parallel, we will work closely with the Government of Azerbaijan to deepen institutional and regulatory reform. Drawing on the lessons of hydrocarbons and financial sectors, the EBRD will strive to create a more favourable investment climate in the real sector by promoting improvements in the legislative framework, enhancing competition and reducing the incentives for corruption. In order for these measures to be successful, opening new channels for constructive policy dialogue with key government agencies will be crucial. The EBRS will also continue to pursue investments in energy projects that improve energy security, create new generating capacity, stimulate competition, diversify energy sources, increase efficiency, and create wider and larger markets through regional integration.

The EBRD’s latest Azerbaijan strategy was adopted on 30 April 2014

EBRD forecast for Azerbaijan’s Real GDP Growth in 2015 1.5%

EBRD forecast for Azerbaijan's Real GDP Growth in 2016 1.5%

Azerbaijan posted sound growth in the first quarter, according to official estimates. Real GDP increased by 5.3 per cent year-on-year in January-March 2015 (up from 2.8 per cent annual GDP growth in 2014). The 25 per cent step devaluation of the manat in February 2015 affected domestic demand and banks negatively, but helped buttress the fiscal revenue impact of declining oil revenues and competitiveness. Higher growth was due to the lower base of the last year, when oil extraction disruptions caused growth to slow, but also due to elevated capital spending on landmark infrastructure projects. As oil prices remained low, trade balance deteriorated and still-high international reserves remained under pressure, declining by 14 per cent month-on-month in March to the lowest level since late-2011. Overall, the growth forecast for 2015 remains unchanged at 1.5 per cent and we expect the same moderate level of growth in 2016.

Azerbaijan in the EBRD’s 2014 Transition Report

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