Azerbaijan, Baku, Dec. 6 / Trend A.Akhundov /
The Azerbaijani financial sector requires significant reforms, the chief economist of the European Bank for Reconstruction and Development (EBRD), Alex Pivovarsky said during a presentation of the bank's Transition Report 2012 in Baku.
EBRD considers the reform of the financial sector to be one of the key priorities for Azerbaijan in 2013.
"The last decision on recapitalisation of the International Bank of Azerbaijan (IBA) has shown the need to reduce its role in the Azerbaijani banking system and the bank's privatisation. This is required in order to strengthen the competitiveness of the sector," Pivovarsky said.
The IBA is the largest bank in the country with 50.2 per cent of the shares owned by the state.
According to the EBRD, the Azerbaijani government should continue to pursue a policy to support economic diversification.
"In order to eliminate obstacles to private sector development, the business environment should be improved. Development of cross-border trade, including completion of the process of joining the World Trade Organisation (WTO), should open the access of non-oil products to the international markets," Pivovarsky said.
The third key priority in 2013 is the further strengthening of competitiveness.
"The regulators need to improve the competitiveness, particularly in the telecommunications, transport and financial sectors and to encourage the entry of foreign strategic investors," Pivovarsky said
According to him, 2012 was memorable with a further shift of the Azerbaijani economy towards the non-oil sector, the recapitalisation of the IBA and the choice of the Nabucco West project as a potential route of Azerbaijani natural gas exports to Europe by the Shah Deniz consortium.
"Financially, Azerbaijan is the safest country in the South Caucasus. However it is facing difficulties in the non-banking financial market and a lack of development of its capital markets.Development of a mechanism for work of municipalities is required and more work can be done in the field of telecommunications and in general in all areas of the economy. Over the last three years progress has been made in the fight against corruption, facilitation of tax and the customs regime which will be reflected in the development of the non-oil sector in the future, " Pivovarsky said.