Country Partnership Framework
The Country Partnership Framework (CPF) for Azerbaijan covering the period 2016 – 2020, sets out the World Bank Group (WBG) support to the country on its path toward a sustainable, inclusive and private sector-led growth underpinned by a diversified asset base. The CPF builds on the WBG Systematic Country Diagnostic (SCD) for Azerbaijan and aligns its objectives with the constraints and priorities identified in the SCD.
The World Bank is the global leader in providing governments with financial assistance and technical advice, with the aim to end poverty and promote shared prosperity.
The Republic of Azerbaijan joined the World Bank in 1992. During 25 years of partnership, the World Bank’s investment in the country totaled over US$ 3.5 billion for 55 projects. These projects cover multiple sectors from public sector governance, health and education to financial sector and infrastructure.
With a solid rise in income and a reduction in poverty, Azerbaijan weathered the recent global economic crisis much better than many other countries over the past 25 years. But the post-crisis world is not free of challenges. While it withstood the crisis relatively well, the situation showed Azerbaijan’s need for a diversified economy, market-based policies and better social services.
The country is included into the ranks of upper middle-income countries, evidenced by the decline in the poverty rate from 50 percent in 2000 to 5 percent in 2013. While some of this improvement was driven by high growth rates, a strong increase in wages, and the introduction of a well-targeted social benefit system, much of it resulted from a jump in oil and gas revenues.
However, these revenues are already stagnating and expected to decline in a long term, so the country must diversify to strengthen its economic position. Even the new natural gas fields coming into production are unlikely to compensate for the revenues that the oil sector has provided. To foster continued improvement in the economy and to increase employment rates, Azerbaijan must find new, sustainable sources of growth in the non-oil sector.
For that purpose, Azerbaijan approved Strategic Road Map on National Economy and Key Sectors of The Economy in December 2016, which covers 11 main directions and is designed to ensure economy’s competitiveness, inclusion and increased social welfare based on sustainable economic development in the country. Mobilization of investments to meet the global challenges, free competition environment, market access and human capital development will strengthen position of Azerbaijan in global economy. These documents are considered a new strategy of Azerbaijan’s economic development until 2025 and in the subsequent period. The World Bank program in Azerbaijan and its objectives are well aligned with the targets and priorities set forth in the National Road Maps.
Better infrastructure is critical in Azerbaijan. Its geographical position makes it an important link between the Black and Caspian Seas and between Russia and Iran. Achieving Azerbaijan’s potential as a transit economy is essential for the stimulation of economic growth, non-oil economic development, and safety and for the reduction of poverty. Improvement of the road network has been identified as one of the priorities for production diversification for the country.
Education is another key area, given the increasing urgency for sustainable long-term reforms and labor market’s demand for skilled and qualified human capital. Enrollment rates in pre-school and higher education are still low and the quality of educational results shows room for improvement.
Agriculture is a meaningful component of Azerbaijan’s non-oil economy and has significant potential for boosting export revenues for the country. While the sector only accounts for 7 percent of GDP, it is still a key source of jobs and is a priority in the context of food safety.
In addition to financing several developmental projects, the Bank is also providing Azerbaijan with analytical and advisory services. This will serve a two-pronged purpose of informing the country’s growth strategy and policy choices as well as the design of its investment operations.
The World Bank is committed to working with the Government and people of Azerbaijan to create an even more prosperous future, where the benefits of economic growth are enjoyed by all and where everyone has an opportunity to make their lives better!
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