Editor's note: Details were added after the fourth paragraph
Azerbaijan, Baku, Oct. 22 / Trend /
The World Bank (WB) Group Board of Directors today discussed a new Country Partnership Strategy (CPS) with Azerbaijan, which provides the framework guiding the World Bank Group's assistance to Azerbaijan for 2011-2014, Itar-Tass reported.
The new Strategy builds on the government's own development priorities and centers on two key areas. The first area is focused on strengthening the non-oil economy, primarily through an improved business environment, better infrastructure, and agriculture improvements. The second area is focused on improving the effectiveness of social and community services, including health, education, social protection and water supply.
"While Azerbaijan weathered the recent global economic crisis relatively well, the crisis has underlined the need for a diversified economy, market-based policies, and strengthened social services and support,", WB Regional Director for the South Caucasus Asad Alam said.
"As the government prepares to meet these emerging needs and challenges, this World Bank / International Finance Corporation strategy seeks to support the country in this endeavor," he added.
The bank reported that irecent years, Azerbaijan's GDP has risen sharply and poverty has fallen dramatically, led by increasing oil and gas revenues. Its remarkable success in reducing poverty from 49 percent in 2001 to 16 percent in 2008 was largely driven by very high growth rates which averaged more than 20 percent for the period.
"However, much of the rapid growth stemmed from a large increase in oil and gas revenues which are now likely to flatten over the coming decade and decline thereafter. That's why economic diversification and development of non-oil sector are becoming more important," the bank's statement reads.
The new Strategy has a number of distinctive features. First, the focus will be on accelerating the implementation of existing projects. Second, new investments will be undertaken selectively in the areas where there is clear Government's demand and ownership and a strong record of institutional capacity.
"Boosting human capital development and resolving key institutional weaknesses are going to be critical for developing the non-oil sector as a relevant source for growth," WB Country Manager for Azerbaijan Joseph Owen said. "We will also be focusing on our large undisbursed portfolio and be giving a priority to accelerating project implementation."
For the full Strategy period of four years the Government has requested a total investment of about $ 1 billion. In the first two years, lending is anticipated to be around $ 380 million. With Azerbaijan's per capita income of $ 4,820 (Atlas method, 2009), which is now placing the country in the group of the middle income countries, 2011 will be the last year when the country will receive concessional financing from the World Bank.
International Finance Corporation (IFC), the World Bank Group's private sector lending arm, will increase its investment program to about $ 200 million during this period
The Bank will increase its analytical work in the areas of job creation and growth, poverty and inequality, financial sector, agriculture and irrigation, wastewater, and public expenditures.
Since joining the IBRD in 1992 and IDA in 1995, the World Bank commitments to Azerbaijan total approximately $ 3 billion in 43 projects. Commitments from the IFC, since Azerbaijan joined in 1995, amount to almost $ 350 million in 45 projects.