A turn toward innovation Asian Development Bank’s new strategy for Azerbaijan

Long regarded as an island of stability in the Eurasian region, Azerbaijan has maintained its status as a key energy and transport hub in the Caspian area for decades. This strategic position—combined with the country’s growing commitment to a green transition—continues to draw the attention of international development partners.

Among them, the Asian Development Bank (ADB) has been a longstanding ally, working with Azerbaijan for over 25 years and providing more than $5 billion in loans during that time. Most recently, the ADB unveiled its new Country Partnership Strategy (CPS) for 2025–2029. Under this strategy, the bank aims to support Azerbaijan’s development across several critical areas, including alternative energy, transport, and the financial sector. In addition, the ADB will back efforts to foster innovation and boost the production of high-tech goods and services, signalling a forward-looking shift in its partnership with Baku.

Founded in 1966 and headquartered in Manila, the capital of the Philippines, the Asian Development Bank (ADB) today comprises 69 member countries. Since Azerbaijan became a full member in 1999, it has received a total of $5.3 billion in loans, grants, and technical assistance for the implementation of more than 85 projects across various sectors, including transport, energy, finance, agriculture, and healthcare. In terms of financing socio-economic development, the ADB ranks among the top three international financial institutions (IFIs) supporting Azerbaijan—alongside the World Bank and the European Bank for Reconstruction and Development (EBRD).

The ADB’s most active lending period in Azerbaijan was between 2014 and 2018, during which the country received $3.04 billion in loans and grants. These funds were largely directed toward projects in the oil and gas industry, transport infrastructure, and public sector efficiency programmes, implemented in partnership with the Azerbaijani government. Following the completion of several large-scale infrastructure and extractive sector projects, the bank’s 2019–2023 Country Partnership Strategy marked a shift in focus—toward support for private sector development. This included initiatives in banking capital, renewable energy, climate resilience, agriculture, and other key areas.

Last year, the Asian Development Bank (ADB), in coordination with the Azerbaijani government, began formulating a new Country Partnership Strategy (CPS). Notably, the bank recently appointed Leah Gutierrez as the new Director General of its Central and West Asia Regional Department. In her new role, Gutierrez will oversee ADB’s cooperation not only with Azerbaijan but also with 11 other countries across the region, including Afghanistan, Tajikistan, Uzbekistan, Kazakhstan, Kyrgyzstan, Turkmenistan, Türkiye, Pakistan, Georgia, and Armenia.

The ADB has now officially launched its CPS for Azerbaijan for the 2025–2029 period. The strategy prioritises the creation of added value, deeper regional integration, and long-term sustainability in achieving the country’s development objectives. Over the next five years, the bank’s support will focus on two key areas: fostering a green and diversified economy, and strengthening low-carbon infrastructure, connectivity, and inclusive growth.

“A new phase of partnership between the ADB and Azerbaijan is beginning, and our priority is to help build a resilient economy, support private sector–led growth, strengthen the financial system, and advance regional cooperation. Through targeted strategic investments and joint efforts, the ADB aims to support the implementation of national development priorities, launch regional initiatives, and contribute to a prosperous future for the people of Azerbaijan,” said Sunniya Durrani-Jamal, ADB Country Director for Azerbaijan.

The new strategy is closely aligned with Azerbaijan’s national development priorities. Among the key focus areas outlined in the CPS are investments in green infrastructure, water resource management, food security, and export diversification. The strategy also aims to build a competitive, sustainable economy by promoting green growth, encouraging innovation, and supporting the development of high-tech industries with strong value-added potential. Workforce upskilling and human capital development are also central to this vision.

Over the next five years, the CPS includes initiatives to accelerate climate action, strengthen disaster risk management, promote gender equality, and drive digital transformation—laying the foundation for inclusive and resilient growth.

The bank’s lending policy is expected to be selective and innovation-driven, with a focus on sustainable growth beyond the extractive sector. As part of the new CPS, the ADB also plans to provide analytical and advisory support to government agencies, investors, and partners by jointly developing and implementing economically viable solutions.

Earlier this year, ADB representatives outlined specific projects and priority areas for future investment cooperation with Azerbaijan. These include support for the government’s efforts to decarbonise the heating sector and integrate renewable heat sources, energy generation from waste-to-energy initiatives, and strategies to improve energy efficiency in public utilities. The bank will also focus on addressing water scarcity, including support for projects involving the integration of digital technologies—such as geographic information system (GIS)-based mapping—into real-time monitoring and groundwater management systems.

Recently, the Asian Development Bank announced an international tender to select a consulting firm for preparing the feasibility study of the first phase of the “Trans-Caspian Green Energy Corridor Central Asia–Azerbaijan” project. On April 4, 2025, Azerbaijan, Kazakhstan, and Uzbekistan, with support from the ADB and the Asian Infrastructure Investment Bank (AIIB), agreed to launch the first phase of this initiative aimed at integrating the energy systems of the three countries and establishing a renewable energy supply route to Europe.

Transport projects have traditionally held a significant share in the ADB’s loan portfolio, and this trend is expected to remain relevant for Azerbaijan until 2029. Since 2001, the bank has allocated around $4 billion to implement 24 infrastructure projects related to the development of the Middle Corridor in Central Asia and the South Caucasus, and it plans to continue supporting the development of the CAREC-2 corridor, which largely overlaps with the Middle Corridor.

The ADB’s support will cover segments such as improving customs and border procedures, enhancing the traceability of cargo transportation through the digitalisation of cross-border trade, expanding multimodal transport, and developing transport infrastructure alongside better coordination of railways and ports to optimise cargo flow at corridor bottlenecks. In this regard, the ADB will assist in modernising railway infrastructure, including digitalisation, electrification, and the implementation of advanced signalling systems. The bank is also exploring prospects for introducing environmentally friendly transport modes in Azerbaijan, including railway and road projects with asset monetisation elements.

As part of the CPS, the bank is prepared to provide Azerbaijan with a loan of up to $1 billion for the development of JSC Baku Metro aimed at creating a “smart” and sustainable urban transport system of the future. This includes technical assistance focused on modernising the Baku Metro by improving energy efficiency, reducing electricity consumption and operational costs, and incorporating renewable energy elements such as solar power and battery energy storage systems (BESS).