Azerbaijan, Baku, Feb. 1 / Trend I.Khalilova /
"To support financial intermediation, the Azerbaijani authorities should continue to strengthen governance in the sector, encourage consolidation and promote competition possibly through the entry of international strategic banking groups," EBRD Baku Office Head Francis Delaey told Trend.
"The government has made economic diversification a cornerstone of its development strategy to reduce Azerbaijan's dependence on oil and gas, create employment and lay the foundations for long-term sustainable growth," he said.
"To do this the government needs to create a business enabling environment. Azerbaijan successfully attracted large investments into the oil and gas sector by creating a favourable operating environment for investors. The government needs to recreate this success to attract investments in the non-oil economy," Delaey said.
He said in the short term the government should further streamline the tax and customs administration, promote the rule of law and encourage greater competition.
The entry of foreign strategic investors would support the diversification efforts and introduce new know-how, he added.
The completion of WTO accession negotiations will help the development of non-oil export industries by improving the customs regime and facilitating trade across borders, Delaey said.
Delaey believes Azerbaijan weathered the global financial crisis relatively well.
In 2010 GDP grew by an estimated 5 percent with the oil sector expanding at 3 percent and the non-oil sector at 8 percent (compared with 15 and 3 percent in 2009, respectively).
"As oil prices recovered, the overall fiscal balance has improved," he said.