The FINANCIAL — The Asian Development Bank’s (ADB) Board of Directors has approved $250 million in policy-based loans to support the Government of Azerbaijan in its efforts to strengthen governance in the public sector and diversify the economy through greater private sector participation.
“Azerbaijan’s comprehensive reform program will help modernize its economy and promote inclusive growth in the medium to long-term,” said Sean O’Sullivan, Director General of ADB’s Central and West Asia Department. “ADB’s support will help the country improve the efficiency of the public sector, while increasing access to finance and making it conducive for small businesses.”
The fall in oil prices since 2014 has hit the Azerbaijan economy hard given that oil and gas revenues account for about 35% of the country’s gross domestic product, 60% of budget revenues, and over 90% of export revenues. In response, the government has intensified its efforts to promote economic diversification away from the hydrocarbon industry with additional incentives to private investors in other sectors and spurring job creation by expanding small and medium-sized enterprises and infrastructure projects, according to ADB.
ADB’s support under the first subprogram of the Improving Governance and Public Sector Efficiency Program is aimed at helping Azerbaijan on a path of fiscal consolidation and economic diversification. The first phase of reforms will introduce rules-based fiscal planning, improve governance of state-owned enterprises, and encourage private sector participation in the economy by easing access to finance. Subprogram 2, which will reinforce and cement the progress under the first subprogram, is scheduled for 2018.
As of 5 December, Azerbaijan has received grants and loans amounting to $4.1 billion since joining ADB in 1998. ADB’s core ongoing operations in Azerbaijan include support for transport, energy, urban infrastructure, and the private sector, and technical assistance and programs in various areas, including knowledge sharing of best international practices on finance, education, governance, and economic development. ADB will continue to work with Azerbaijan and other development partners to promote cross-border links within the Central Asia Regional Economic Cooperation (CAREC) Program.