The Asian Development Bank (ADB) approved a $500 million loan to help Azerbaijan maintain social spending, create jobs, and diversify its economy to mitigate the adverse impact of a crash in oil prices, ADB said in a message.
Sean O’Sullivan, director general of ADB’s Central and West Asia Department, said ADB’s support was important for Azerbaijan’s economy, and would help promote sustainable development and inclusive growth over the longer-term.
“Transforming Azerbaijan into a dynamic and diverse economy will need major improvements in public sector efficiency, the ease of doing business and competition”, he added.
According to the ADB message, the loan will contribute to a $1.4 billion stimulus package.
The package is boosting social assistance for around 3.7 million people, or more than one third of the population, increasing the wages of public sector employees, increasing benefits for retirees and low-income families, the message said.
According to the message, the government is also promoting economic diversification away from the hydrocarbon industry with additional incentives to private investors in other sectors and spurring job creation through vocational training and infrastructure projects.
“In the first quarter of 2016 the Azerbaijan economy fell into recession, and ADB forecasts the economy will shrink by at least 2.5% this year”, the message said. “This along with a sharp depreciation in the local currency, the manat, has brought hardship to the population as they see their real incomes going down”.
According to the message, in addition to the loan, ADB will provide technical assistance of $1.2 million to help design reforms to macro fiscal management, state-owned enterprises, and the finance sector.
ADB, based in Manila, was established in 1966 and is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration.
Azerbaijan became the ADB member on December 22, 1999. (Trend/Business World Magazine)