Azerbaijan Country Presentation
Closing Remarks by
Mr. Liqun Jin
Vice President - Operations Group 1
Asian Development Bank
At the 39th ADB Annual Meeting
3 May 2006
Hyderabad, India
Thank you, Mr. Deputy Minister Jabbarov for your very enlightening and informative country presentation on Azerbaijan, its socio-economic outlook, the ongoing structural and policy reforms, business opportunities, and development challenges.
ADB accounts for only 1% of the credits by IFIs. We have an excuse at this stage, being a new partner, but the excuse will not hold water with the passage of time. But we will catch up, particularly in the private sector development.
It seems quite clear that following independence, Azerbaijan has been faced with a formidable challenge of nation-building or rebuilding - in all aspects and spheres: political, economic, institutional, and social. To its credit, the country has carried out positive economic, institutional, and social reforms. However, well-targeted reforms must be adhered to and accelerated if the development goals are to be attained.
Azerbaijan's achievements in a relatively short period of time are impressive. But there is a fundamental challenge for Azerbaijan over the medium- and long-term. This is to broaden the economic base and ensure equitable economic and social development. To achieve this, the country needs to address the infrastructure constraints that limit economic activities and connectivity (both internal and external) and the effective provision of basic social needs. It's no less critical to address the institutional imperatives of good governance and business climate. Your presentation highlights the good progress in these key areas.
The oil sector accounts for more than 42% of GDP and thus has been the main contributor to growth. The large inflow of petrodollars, however, is also putting tremendous upward pressure on inflation and the exchange rate, posing a serious threat to the good record of macroeconomic stability in Azerbaijan over recent years. The Government is now working on effective use of the large oil revenue and ensuring the welfare of the future generations, while promoting growth and equity in the present stage. And we in ADB encourage these efforts to continue. Effective macroeconomic management (fiscal, monetary and exchange rate) and good governance, are undoubtedly an important prerequisite to sustainable growth.
I am also very heartened to hear of the focus on non-oil sector development. While oil production and oil exports are beginning to increase sharply and are expected to peak in 2010, proven reserves are expected to be depleted over the next 15 to 25 years. Without new discoveries this window of opportunity will be relatively short. And the main challenge for Azerbaijan is how best to develop the non-oil sector to ensure that the economy continues to grow on a sustainable path after the oil boom, meeting both short-term expectations and longer-term demands.
A key objective is to develop income-generating and new employment opportunities in the non-oil sector, and again, I applaud the Government's focus on this critical area, and on such sectors as non-oil industries, agriculture, tourism, regional trade, banking and finance, and small and medium enterprise (SME) development.
I again thank you, Deputy Minister Jabbarov, for an excellent and informative presentation, and reiterate ADB's strong commitment to Azerbaijan as a committed and results-oriented development partner.
Ladies and gentlemen, this concludes this presentation, and I thank you for your attention.
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