Azernews.Az

By Gulgiz Dadashova

Azerbaijan, an energy-rich South Caucasus nation, has undertaken significant changes to develop the economy, reform the business and state sector and to ensure favorable investment environment. These steps have turned the country into the top economy in the surrounding geographic region.

To take the next step and further ensure stability and economic prosperity, Azerbaijan has launched a new wave of reforms by strengthening institutions, encouraging competition and adopting new economic development model. The European Bank for Reconstruction and Development is one of the main financial institutions backing the country in its long journey.

To date, the EBRD has invested a total of 2.5 billion euros in Azerbaijan for implementation of 164 projects, including 154 private sector projects. The Bank increased its investment in Azerbaijan’s private sector over the past four years. Recent government reforms to improve the investment climate have given further momentum to the EBRD's expanding and diversifying portfolio‎.

Azerbaijan’s President Ilham Aliyev, while talking to EBRD President Suma Chakrabati during the latter’s Baku visit, expressed his confidence that long-term cooperation between Azerbaijan and EBRD would successfully continue even further.

Underlining Azerbaijan's interest in maintaining cooperation with EBRD, the head of state noted that this collaboration contributed to the implementation of a number of projects in the country.

Pointing to EBRD`s investment in the private sector, President Aliyev hailed it as a proper assessment of the situation in this sector, and said these investments created additional financial opportunities for the development of the private sector.

The two sides discussed EBRD-Azerbaijan cooperation, the government’s recent and planned reforms, the Bank’s support for the strategic cross-border energy project, the Southern Gas Corridor, and potential cooperation in the country’s banking sector, including what could be the first local currency bond to be issued by an international financial institution.

Praising the bilateral ties, Chakrabarti noted that the investments in the private sector, particularly in the non-oil sector had been significantly raised in recent years.

Saying the private sector accounted for 70 per cent of the total volume of investment that the EBRD made in Azerbaijan's economy, Chakrabarti noted that 8 out of 9 projects they funded was implemented in the non-oil sector.

During the Baku visit, the EBRD delegation also had discussions with Economy Minister Shahin Mustafayev, Chairman of the newly-established Financial Markets Supervision Authority (FMSA), Rufat Aslanli and Finance Minister Samir Sharifov.

There will be a significant growth in the investments of the EBRD in Azerbaijan in 2016, said Chakrabarti as he met with Aslanli.

Aslanli, for his part, said that FMSB is ready for a close cooperation with the EBRD for recovering the country's banking sector.

Also, Azerbaijan has urged the European Reconstruction and Development Bank (EBRD) to render technical support for establishing a free trade zone in the Alat settlement at the initial stage.

Shahin Mustafayev stressed the opportunities for cooperation in the field of transit, as well as within the Trans-Anatolian gas pipeline (TANAP), which is an important part of the Southern Gas Corridor.

Chakrabarti in his turn said that the EBRD will consider the issue of investing in the free trade zone which includes the territory of Azerbaijan’s Baku Sea Trade Port.

The official further mentioned that the EBRD and Azerbaijan can cooperate in the fields of tourism, infrastructure and establishment of special economic zones.

The EBRD team also met representatives from the banking sector and from the civil society. At a roundtable discussion with the chief executives of seven banks and financial institutions, the EBRD discussed challenges faced by the banking sector such as the low liquidity levels in the Azerbaijani manat, rising levels of non-performing loans and continued low levels of loan repayments.

During their meeting with the EBRD president, civil society representatives described good progress on a number of issues and also areas where in their view more needed to be done. Of particular note was the perceived progress in tackling petty corruption, thanks to the gradual implementation of the Azerbaijan Service and Assessment Network (ASAN) of citizen service centres.

Chakrabati, summarizing his Baku visit, stated the recent drop in oil prices presented an opportunity for the diversification of the Azerbaijani economy by growing the non-oil and gas private sector.

“This is a development that the EBRD strongly supports. I also stressed that for long-term private sector growth, in particular for small and medium-sized enterprises, it is crucial to have a vibrant and viable financial sector,” he said.

Speaking about the financial sector, the EBRD president voiced that the Bank is prepared to work with all stakeholders to find solutions to existing challenges.

“As for oil and gas, we will aim to make strategic investments which will guarantee the country’s long-term economic health. In that context we will support the Southern Gas Corridor, a project which diversifies export routes for Azerbaijan and is also important for energy security in Europe.”

The EBRD President added that the Bank is considering supporting the two pipelines that form part of the Southern Gas Corridor, the Trans-Adriatic Pipeline (TAP) where the EBRD is considering providing a syndicated loan of up to €1.5 billion, and is also in the early stages of considering co-financing the Trans-Anatolian Pipeline (TANAP).

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