Main economic events in Azerbaijan in 2009

Analysis Materials 30 December 2009 12:13 (UTC +04:00)

Speaking about the economic results of 2009, the main event in Azerbaijan was the growth of the national economy amid the global financial crisis. According to the data provided by the State Statistics Committee, over the eleven months, Azerbaijan's GDP grew by 9 percent compared with last year. Roughly the same forecast was made by the World Bank. The GDP per capita amounted to 3,360.7 manat ($4,181), an increase of 7.6 percent.

Earlier this year, Azerbaijan President Ilham Aliyev, who attended the World Economic Forum (WEF) in Davos, gave an interview to the U.S. television channel CNBC. This landmark interview largely determined the future development process in the economy of Azerbaijan. Investing in non-oil sector - large-scale infrastructure projects, information and communication technologies (ICT), the modernization of agriculture along with the conservative policies of financial institutions created conditions for the stability of the Azerbaijani economy during the crisis. Moreover, as mentioned above, during the year economic growth was recorded in Azerbaijan. This fact is also confirmed in the 2009-2010 WEF report, where in the competitiveness ranking of world economies, Azerbaijan made an impressive jump from 69 the to 51st place.

The main economic event of the year in Azerbaijan:

- On Jan. 1, the system of "single window" for registration and passage of goods through customs checkpoints entered into force;

- On Feb. 27, SOCAR and French Total Company signed a PSA in Baku to develop a large offshore gas block "Absheron". SOCAR received 40 percent participation share and Total - 60 per cent in the project.

- On March 15, a Law on Insurance Activity came into force in Azerbaijan. One of the new provisions of the law was the elimination of the ban on the participation of foreign capital at the companies at 49 percent. Henceforth, the foreign investors can own 100 percent capital at insurance companies.

- In order to further support macroeconomic balance, financial stability and maintain economic activity in the country, CBA reduced rates since the beginning of this year in three stages - first from 8 to 3 percent and since 25 May to two percent. Last year, the rate was reduced in three stages from 15 to 8 percent.

- On July 13, BP and SOCAR signed a memorandum of understanding (MOU) to jointly explore and develop the Shafag and Asiman structures in the Azerbaijan sector of the Caspian Sea in London. The MOU was signed by Rovnag Abdullayev, President of SOCAR, and Andy Inglis, BP's Chief Executive of Exploration and Production. 

- RV Investment Group (deals with development of gold fields) and the Azerbaijani government signed the protocol on Azerbaijani gold export on July 21.

- In August Orbital Sciences Corp. won a tender to create the Azerspace satellite. The tender was announced by the ministry in January. The satellite will have transmission for TV and radio broadcasting and Internet. The satellite will cover the countries of European and significant part of Asian continents.

- In August SOCAR started the first exploration drilling on the Umid prospective gas condensate structure. This is the first exploration drilling the company has implemented independently for the past 15 years. The gas reserves expected from the Umid field are estimated at 300 billion cubic meters and the gas condensate reserves expected are estimated at 30-40 million tons.

- On Dec. 14, SOCAR and Russian Gazprom signed a contract to supply Azerbaijani gas to Russia. 

- The Islamic Development Bank approved financing to the amount of $200 million for construction of Cenub station on October 20 (near Ali-Bayramli thermal station). Funds worth €300 million were received from three banks - Bayerische landesbank, Societe Generale and Credit Suisse to finance this project. The loan was given for 10-year-state guarantee. 

- Forum on the Long Term Economic and Social Development of Azerbaijan took place in Baku on October 21. It was attended by Ngozi Okonjo-Iweala, Managing Director of the World Bank. He said that the WB is prepared to support the government of Azerbaijan in transforming from the country with average income level to higher level within realization of a new model of economic development.

- In November the 64th session of UN General Assembly adopted a resolution on the project proposed by Azerbaijan to establish a trans-Eurasian high-speed information line "East-West". The resolution welcomes the readiness of the Republic of Azerbaijan to coordinate regional efforts to implement this initiative. The "East-West" is intended to connect a total of 20 countries and play the role of locomotive for the development of the region.

- On Nov. 20, in Baku a memorandum of understanding was signed on the construction and operation of the shipbuilding yard by the Singaporean Keppel Offshore & Marine Company. The plant will be built near the Baku Deep Water Jacket Plant named after Heydar Aliyev of SOCAR (State Oil Company of Azerbaijan). The shipyard will be an addition to the project of building a new oil terminal and port in Garadagh district of Azerbaijan. This terminal will transport Kazakh oil for onward transit through the Baku-Tbilisi-Ceyhan pipeline. It is supposed that there will not be analogue of this plant in the region and the orders to build ships will be accepted both from the country and abroad.

- On Dec. 1, a loan agreement was signed in Baku between the European Bank for Reconstruction and Development and Azerbaijan AZMECO company to build a plant to produce methanol.

- On Dec. 15, SOCAR and the National Gas Export Company of Iran signed an agreement on Azerbaijani gas supply to the northern provinces of Iran in the winter period.

- On Dec. 16, the Azerbaijani mobile operator Azerfon created a new brand with Vodafon and announced the commercial launch of its 3G network. Azerfon-Vodafone subscribers will receive access to 3G services and new products due and be able to choose special mobile phone numbers. The large-scale network allows Internet access with a speed of 3.6 Mbit per second.

- On Dec. 17, the Asian Development Bank (ADB) and the Government of Azerbaijan signed a $75 million loan agreement on the first tranche of Water Supply and Sanitation Investment Program. Total financing for water management in Azerbaijan provided by ADB amounts to $600 million.

- On Dec. 17, the World Bank (WB) and the Azerbaijani government signed loan agreements worth $450 million on the project promoting rail transit and trade in Azerbaijan. The project consists of three components, envisaging improving service on railway, ensuring competitiveness, operations and economic effectiveness, expanding railway bed in the direction of East-West. 

- On Dec. 22 the State Oil Company of the Azerbaijan Republic (SOCAR) signed a PSA contract with Bahar Energy Limited for the exploration, rehabilitation and development of the Bahar and Gum Deniz offshore fields in the Azerbaijan sector of the Caspian Sea. Upon the contract, SOCAR owns 20 percent and Bahar Energy Limited 80 percent participation share.   

- During the year, tariffs on the Internet, including broadband, were significantly reduced several times. Currently, tariffs on Internet services in Azerbaijan are at the level of countries in Eastern Europe.

- During the year several large-scale projects were implemented for construction and reconstruction of roads and transport systems of the capital and the country, including the commissioning of the Baku-Guba-Russian border highway of national significance.

Showing good results in difficult times, Azerbaijan's economy managed to make a small contribution to the overall withdrawal of the world economy from the crisis, thus becoming more attractive for partnership and investment.