阿塞拜疆-25-29财年国家伙伴关系框架（英）_93页_1mb

Summary of the World Bank Group Country Partnership Framework for Azerbaijan (FY25-29)

Core Content

The World Bank Group (WBG) has developed a Country Partnership Framework (CPF) for Azerbaijan for the period FY25-29, aimed at supporting the country's transition to a more dynamic, diversified, and green growth model. The CPF is guided by Azerbaijan's Socio-Economic Development Strategy (SEDS) for 2022-2026, the 2022 Systematic Country Diagnostic (SCD), the 2022 Country Economic Memorandum (CEM), and the 2023 Country Climate and Development Report (CCDR). It also aligns with the WBG Evolution Roadmap and is designed to be highly selective, focusing on two high-level outcomes (HLOs): increased resilience and sustainability and increased productivity and better jobs.

The CPF follows a Multiphase Programmatic Approach (MPA), which involves phased and coordinated interventions across various sectors. The WBG will work closely with the government to support reforms and investments in energy and water, while also engaging in public-private partnerships (PPP) and financial sector modernization. This framework comes after a delay due to political and economic challenges, and it is aligned with the government's renewed interest in re-engaging with international institutions.

Main Objectives

The CPF supports the following key objectives:

• Enhancing the shift to renewable energy to reduce reliance on hydrocarbons and support a greener economy.
• Enhancing adaptation to climate change in agriculture and water sectors, which are increasingly vulnerable to climate impacts.
• Improving the business environment and access to employment to foster a more competitive and dynamic private sector.
• Strengthening transport and digital connectivity to improve economic integration and support growth.

These objectives are aligned with global challenges such as climate change, economic diversification, and sustainable development, and are designed to have a transformative impact on Azerbaijan's economy and society.

Key Information

Economic Context

• Growth slowdown: Economic growth has decelerated since 2010, averaging 1.7% annually due to fluctuating hydrocarbon prices and declining production.
• Recent performance: In 2024, real GDP growth is expected to stabilize at around 2.3%, with non-energy sectors contributing significantly to growth.
• Fiscal and current account surpluses: Both the budget and current account are in surplus, with the current account estimated at 12.1% of GDP in 2024 and the budget surplus at 5.2% of GDP.
• Inflation: Inflation has remained relatively low, with the Central Bank of Azerbaijan (CBAR) targeting 4±2%, and reaching 2.2% in 2024.
• Debt levels: Government debt is at 21.8% of GDP in 2023, and is expected to gradually increase to 30% of GDP to support priority investments.
• Non-hydrocarbon sector: Accounts for 63% of GDP in 2023, with low productivity and private investment.

Social and Political Context

• Political stability: Azerbaijan has maintained political stability despite regional and global tensions.
• Centralized governance: The government remains highly centralized under President Aliyev, with limited political opposition.
• Peace with Armenia: A potential peace agreement with Armenia could enhance regional security and open new opportunities for trade and integration.
• Geopolitical position: Azerbaijan occupies a strategic position in the energy and trade corridor between East and West, and has hosted COP29, positioning itself as a leader in global climate discussions.

Poverty and Shared Prosperity

• Poverty reduction: Poverty rates have fallen significantly, from nearly 49% in 2001 to 6% in 2012, and stabilized at around 5% in recent years.
• Rural poverty: Poverty rates in rural areas are 2 percentage points higher than in urban areas, with 42% of the population living in rural areas.
• Informal sector: A significant portion of the workforce is in the informal sector, with limited access to social benefits.
• Gender inequality: Azerbaijan ranks 70th out of 170 countries on the UNDP Gender Inequality Index, with women earning 68% of what men earn and underrepresented in key sectors like civil service and judiciary.

Climate and Energy

• GHG emissions: Azerbaijan's economy is heavily dependent on fossil fuels, contributing to significant GHG emissions, with 30% from non-productive methane emissions.
• Climate targets: The country aims to reduce GHG emissions by 35% by 2030 and increase renewable energy capacity to 30% of total mix by 2030.
• Green energy corridor: Azerbaijan is seeking to establish a green energy corridor with neighboring countries, enabling the export of renewable energy to Europe.

WBG Partnership Strategy

• Collaboration: The IBRD, IFC, and MIGA will deepen collaboration in energy and water, with coordinated and phased interventions.
• Selective engagement: The CPF will focus on high-impact areas, ensuring that interventions are aligned with the country's development agenda and global priorities.
• Programmatic approach: The MPA will allow for long-term planning and implementation, with the potential for multiple phases of support.
• Fiscal prudence: The government has maintained fiscal discipline, with a debt-to-GDP ratio of 21.8% in 2023, and has raised its debt-to-GDP limit to 30% for future investments.

Key Challenges and Risks

• Economic vulnerability: Continued reliance on hydrocarbons makes the economy vulnerable to price fluctuations and global transitions away from fossil fuels.
• Structural constraints: The economy is characterized by a large state footprint, weak private investment, and limited financial market depth.
• Climate risks: Agriculture and water sectors are increasingly vulnerable to climate impacts, including droughts, floods, and extreme weather events.
• Data limitations: Limited data availability hampers detailed analysis of poverty and inequality trends.
• Social protection gaps: Coverage of social assistance remains insufficient, with many families in the poorest quintile not receiving support.

Conclusion

The CPF for Azerbaijan is a strategic and selective engagement aimed at transforming the country's economy into a more resilient, productive, and sustainable one. It supports a shift towards renewable energy, climate adaptation, improved business environments, and enhanced connectivity. The framework is designed to work in tandem with the government's SEDS strategy, and it reflects the WBG's commitment to sustainable development, climate resilience, and economic diversification in the context of a changing global economy.