EBRD reveals new priorities of its strategy for Azerbaijan
By Leman Mammadova
European Bank for Reconstruction and Development (EBRD) continues its commitments to provide investments in various spheres in Azerbaijan for the further development of the economy.
The Board of Directors of the EBRD has approved a new strategy for Azerbaijan which will guide the Bank’s investments and policy work in the country for 2019-2024.
The 2019-2024 strategy sets out the following priorities: to promote economic diversification by supporting competitiveness and good governance, to strengthen resilience by developing financial markets and to support green economy transition and regional connectivity.
The Bank will continue its efforts to help diversify Azerbaijan’s economy by supporting the development of the private sector in non-oil sectors and strengthening governance of private and state-owned companies.
In addition, the EBRD will work to further expand access to finance for local businesses by encouraging lending by banks and non-bank financial institutions as well as by helping develop local currency and capital markets.
Furthermore, the Bank will step up its support to the country’s green economy, including financing for renewable energy sources, increased energy efficiency and cleaner transport and sustainable infrastructure.
“The new strategy gives a fresh impetus to our engagement in Azerbaijan,” Ivana Duarte, Head of the EBRD’s office in Baku, said. “The EBRD stands ready to help Azerbaijan develop its non-oil sector, strengthen local lenders and boost investment in the green economy."
She said the Bank sees a huge potential in the renewables sector and aim to make a real impact in this area. "Continued efforts by the authorities to reform the energy market and improve the business climate will be important in helping to unlock our own funds and mobilizing financing from other sources.”
EBRD, established in 1991, invests in projects that contribute to the transition to an open market economy, as well as the development of private and business activities. The Bank was established to support countries of the former Eastern Bloc in the process of establishing their private sectors. To that end, it offers “project financing” for banks, industries and businesses, for new ventures or existing companies.
EBRD invests in debt capital-market instruments as well as in equity. These transactions promote higher standards of corporate governance while also fostering capital market development and promoting alternative sources of financing. The EBRD also issues its own local-currency-denominated bonds, or bonds linked to local currency, on the international and domestic markets for its funding purposes.
The Bank is a leading investor in Azerbaijan. The country has been cooperating with EBRD since 1992 to achieve further economic development. One of the main priorities of EBRD in Azerbaijan is to support the local corporate sector with direct financing. EBRD continues to pursue investments in energy projects, especially where there is a gap to improve efficiency and energy security.
The Bank continues working with the Azerbaijani government and the private sector to make further investments in the country. EBRD forecasts economic growth in Azerbaijan at 3.5 percent in 2019. EBRD's financing projects in Azerbaijan contribute greatly to the creation of modern infrastructure in the country.
At the moment, the number of active EBRD projects in Azerbaijan is 45, and in total, the EBRD has implemented 167 projects in Azerbaijan. The current portfolio of projects is worth 1.4 billion euros. Major share of investments accounts for to the private sector (47 percent).
In total, Bank has allocated almost 3.3 billion euros for projects in various sectors in Azerbaijan. The largest share of investments account for the energy sector (50 percent), while 42 percent accounts for infrastructure projects. The rest is for financial, industrial and commercial projects.
The Bank’s largest loans include financing the construction of the Trans-Anatolian Pipeline ($500 million) and the development of Shah Deniz 2 ($1 billion).
Presently, EBRD pays special attention to the development and financing of renewable energy projects in Azerbaijan. The Bank is also interested in the development of SMEs and financial sector in the country while helping the economy to diversify further.
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Leman Mammadova is AzerNews’ staff journalist, follow her on Twitter: @leman_888
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