The International Monetary Fund (IMF) calls on the Azerbaijani government to continue creating conditions for attracting private investment, minimizing fiscal risks and implementing three key areas of reforms, Report informs referring to the IMF.
"Azerbaijan 2030 recognized the role of the private sector to drive investment, growth and employment, and the government simplified business procedures and licensing and has started taking steps to develop financial markets," reads the report.
"Staff urges the government to continue to create the conditions to attract private investment, minimize risks to public finances, and pursue several key reforms:
Reducing the footprint of the state and improving SOEs performance. The government established the Azerbaijan Investment Holding (AIH) in 2020 and the Azerbaijan Transport and Communications Holding (AZCON) in 2024 to improve the performance of several strategic state-owned enterprises (SOEs). Since 2020, the AIH has introduced several reforms on their portfolio companies, including establishing supervisory boards and committees, enhancing financial reporting and independent audit, and setting up KPIs and developing a monitoring dashboard. Following the OECD review of the AIH and SOEs, the authorities developed an action plan to implement the recommendations. Staff looks forward to progress on several key areas, such as developing an ownership policy, leveling the market playing field where SOEs compete, introducing independent board members, and improving transparency and disclosure practices. Applying good governance standards to all large SOEs and implementing the privatization roadmap should also be prioritized."
"Sustaining gains in transparency and fighting corruption. Azerbaijan has made progress in enhancing fiscal transparency, ranking 23rd out of 125 countries in the 2023 Open Budget Survey, and implementing its anti-corruption policy and action plan. The authorities should continue efforts to close the gaps identified by the OECD, including by finalizing the draft law on conflict of interest, applying more transparent and competitive public procurement practices, and operationalizing the asset disclosure system for public officials. The authorities should also prioritize addressing MONEYVAL recommendations, building on recent initiatives to increase resources and build capacity on countering ML/FT, set up a centralized beneficial ownership registry, and enhance the sanctioning regime."
"Promoting private sector access to finance. Despite recent improvements, Azerbaijan’s financial and capital markets remain underdeveloped, and access to finance remains an obstacle to faster private sector-led growth. The authorities have made progress towards achieving a stable banking sector, a necessary but insufficient condition for further financial deepening. Improving corporate governance, strengthening accounting and auditing standards in the private sector, and modernizing legal frameworks are some reforms to support capital market development. Given their large number, improved access of SMEs to financing is also particularly important for future growth and diversification. The authorities’ Financial Sector Development Strategy 2024-26 appropriately seeks to address these constraints," the IMF noted.
