Azerbaijan and ADB
The ADB–Azerbaijan partnership aims to support the private sector, realize green energy initiatives, raise public sector efficiency, improve infrastructure, and strengthen human capital.
Azerbaijan’s economic growth recovered shortly after the coronavirus disease (COVID-19) pandemic severely hit the economy. Growth was supported by strong performance in manufacturing, transportation, retail trade, and information and communications technology. The economy continued to rebound in the services sector including the hospitality sector. The pace of vaccination remained stable with 15% of the population having received booster shots and 46% being fully vaccinated.
The Asian Development Bank (ADB) is one of Azerbaijan’s key sources of official development assistance. Current ADB operations are being implemented under the country partnership strategy, 2019–2023, which aims to boost private sector development, raise public sector efficiency, improve infrastructure, and strengthen human capital. The strategy is closely aligned with the Government of Azerbaijan’s strategic road maps for the national economy and main economic sectors. A new country partnership strategy for 2024–2028 is expected to be implemented by 2024.
To date, ADB has committed 67 public sector loans, grants, and technical assistance totaling $3.7 billion to Azerbaijan. Cumulative loan disbursements to Azerbaijan amount to $3.96 billion. These were financed by regular and concessional ordinary capital resources. ADB’s ongoing sovereign portfolio in Azerbaijan includes 1 loan and 1 sovereign guarantee worth $565.2 million.
Azerbaijan has been working to promote growth and connectivity through the Central Asia Regional Economic Cooperation (CAREC) Program since 2003. It recently endorsed CAREC’s proposed New Green Recovery, Food Security, and Clean Energy Cooperation initiatives to help accelerate the region’s recovery from the COVID-19 pandemic, improve food security, and boost the development of clean energy.
As part of its education and public sector programs, ADB provided technical assistance of $750,000 for Preparing the Modernizing Vocational Education and Training for Economic Diversification Sector Development program. The assistance helped identify the needs of technical and vocational education and training.
An ongoing $400 million Railway Sector Development Program supports the rehabilitation of the tracks and structure of the Sumgayit–Yalama rail line and facilitates railway sector reforms including the corporate governance, operational efficiency, and financial sustainability of the Azerbaijan Railway Company.
Nonsovereign operations. Total outstanding balances and undisbursed commitments of ADB’s nonsovereign transactions in Azerbaijan as of 31 December 2022 was $34.7 million representing 0.27% of ADB’s total private sector portfolio.
Operational challenges. Azerbaijan aims to develop a sustainable and competitive economy, achieve an inclusive society, improve human capital, shift to “green growth,” and improve infrastructure as per the government’s 10-year development strategy, Azerbaijan 2030: National Priorities for Socio-Economic Development.
The government currently intends to reduce external debt and is considering external borrowing for innovation and high technology. ADB works closely with the government to establish an environment for selective lending on such projects.
The government is working closely with ADB to further strengthen compliance with the bank’s procurement, financial management, anticorruption, transparency in procurement, and environmental and social safeguards requirements. Improving gender equality measures within projects, strengthening the governance and institutional capacities of implementing agencies, and promoting the financial sustainability of investments are the key focus.
ADB increased its knowledge-based activities to support Azerbaijan’s knowledge and analytical needs. The bank supported efforts to strengthen knowledge management and improve the country’s startup ecosystem through a roundtable forum and a book launch event for Azerbajian’s Ecosystem for Technology Startups: Baku, Ganja and Shamakhi.
ADB also helps strengthen gender-based violence response mechanisms in Azerbaijan. In 2022, government representatives, development partners, and civil society members joined the roundtable “Sustaining Action to End Gender-Based Violence.” Participants discussed the preparation of a regional technical assistance to respond to gender-based violence. The initiative is supported by the Japan Special Fund.
Number of Shares Held
47,208 (0.444% of total shares)
86,322 (0.649% of total membership, 0.997% of total regional membership)
*Overall capital subscription
*Paid-in capital subscription
* United States dollar figures are valued at rate as of 31 December 2022.
ADB Governor: Samir Sharifov
ADB Alternate Governor: Mikayil Jabbarov
ADB Director: Rachel Thompson (Australia)
ADB Alternate Director: David Cavanough (Australia)
Financing partnerships enable ADB’s financing partner governments or their agencies, multilateral financing institutions, and private organizations to participate in financing ADB projects. The additional funds provided may be in the form of loans and grants, technical assistance, and nonsovereign cofinancing.
Cumulative cofinancing commitments in Azerbaijan:
ADB will focus on energy, transport, public sector management, agriculture, and education for 2023–2026. The bank will support the government in boosting regional cooperation through well-integrated regional transportation systems. The rebuilding of the regional irrigation network with ADB’s contribution will increase productivity in agriculture and help sustain food security. Energy reforms will be supported by the development of fundamental transmission and distribution infrastructure and the adoption of innovative initiatives in the sector. Investing in the development of technical vocational education will strengthen human capital in the country. It will also help improve and build modern vocational schools and promote policy reforms. ADB will engage the private sector for projects related to trade, finance, small and medium-sized enterprise expansion, and infrastructure development. ADB closely cooperates with the government to make local currency financing available to the private sector through local currency bonds.
Diversification and strengthening of Eurasian rail corridors benefit Central Asia Regional Economic Cooperation members through revenues from transit fees.
The ability of the economies of the Caucasus and Central Asia to effectively respond to external shocks critically depends on their cooperation in diversifying trade and transport routes. The right policies and development of the Middle Corridor is a key to success.
No country can fight climate change alone. The countries of the Central Asia Regional Economic Cooperation (CAREC) program should take coordinated action to combat the increasing impacts of climate change and find sustainable solutions.
As countries in Central Asia and the Caucasus navigate post-pandemic recovery and geopolitical challenges, managing increasing public debt becomes crucial for sustainable growth.