Azerbaijan-ADB dialogue evolves upwards Review by Caliber.Az

Stable economic growth and the sustainable position of a key energy and transport hub of the Caspian region have long been drawing the attention of international donors to Azerbaijan. Our country has been cooperating very successfully with one of them - Asian Development Bank (ADB) for about 24 years and during this period the Bank has provided funds of more than five billion dollars. According to the Country Cooperation Program for 2024-2028, the Bank plans to further expand funding and focus attention on transport, green energy, agriculture, education and other areas. Given the scale of cooperation, Azerbaijan participates in all forums conducted by the ADB, including the 56th annual meeting of the ADB Board of Governors, which started the day before in the Republic of Korea.

Asian Development Bank, the main financial institution of the vast Asian region, was founded in 1966, it has 68 member countries and its headquarters is located in Manila, the Philippines capital. Since 1999, when Azerbaijan became a full member of the ADB, our country has received $5.231 billion in loans, grants and technical assistance for 84 transport, energy, financial, agricultural, health and other projects. Along with the World Bank, the main Asian donor agency is among the leaders in terms of financing social and economic initiatives in Azerbaijan.

Cooperation with the ADB peaked during the implementation of the next strategic plan in 2014-2018. At that time, loans and grants totaling $3.04 billion were approved for Azerbaijan. The largest projects financed by the ADB in that period were the implementation of the project "Improving Public Sector Governance and Efficiency Program", for which $500 million was provided, as well as financing of the second phase of the Shah Deniz gas field development project, for which $1.25 billion loan was allocated.

But the most significant development in the current country programme has been ADB's first major private sector investment in renewable energy, which last year signed a $21.4 million non-sovereign loan with Masdar Azerbaijan Energy (co-founded by Masdar of the UAE). "The loan provides long-term financing for a 230MW solar power plant that will generate enough green energy to power about 30,400 households annually. This project will increase the share of renewable energy in the energy mix, which is still dominated by fossil fuels, and encourage further involvement of private investors in Azerbaijan's alternative energy sector," ADB said in a recently published report. It's noteworthy that the Azerbaijani government and the ADB have recently launched another joint project in the field of renewable energy: in particular, the matter concerns the construction of a 100 kW floating solar power plant on Boyukshor Lake in Baku (95 kW in water, 5 kW on land). This is a pilot project to test and evaluate the efficiency of floating solar systems, but ADB intends to expand support for green energy projects in the next country program.

It is worth noting that the above-mentioned areas and a number of other vectors will be further expanded in the new country partnership strategy with Azerbaijan for 2024-2028, which the Asian Development Bank has already started preparing. The priorities of future cooperation with the Bank and the medium-term lending program were discussed in March this year during a meeting of Finance Minister Samir Sharifov and ADB Director of Public Management, Financial Sector, and Trade Department of Central and West Asia Department Tarik Niyazi. In particular, the sides discussed aspects of preparation of the new country partnership strategy taking into account the priorities of key long-term governmental documents - "Azerbaijan 2030: National Socio-Economic Development Priorities" and the "Social and Economic Development Strategy of Azerbaijan 2022-2026", including public sector management and financial sector development reforms implemented in our country.

According to recent information, within the new country programme, the ADB plans to work with the government of Azerbaijan and the private sector in the areas of education, health, agribusiness, transport, green and conventional energy and improve governance in the public sector. In particular, the Bank will support energy reforms through the development of basic transmission and distribution infrastructure, as well as the introduction of other innovative initiatives. ADB's financial assistance will be used to reconstruct the regional irrigation network, which will increase activity in the agricultural sector and improve food security in the country. The bank's capital will be directed to technical vocational education, and the construction of new educational institutions (support of human capital), as well as it is planned to extend cooperation in the field of digitalization of healthcare in our country. Another important direction is the participation of the ADB in projects to support the private sector of the country, in particular the projects related to trade, finance, and development of small and medium enterprises, as well as financing of Azerbaijani enterprises in local currency by issuing bonds. Overall, ADB's new strategy for 2030 envisages increasing the share of the private sector in the investment and lending portfolio to one-third, not only through traditional lending but also through the Asian Development Bank's participation in the capital share of private companies.

ADB's traditional infrastructure development endeavours have not been forgotten: the $400 million Railway Sector Development Programme, aimed at improving railway services and financial operations by 2024, will continue financing the reconstruction of the double-track Sumgayit-Yalama railway line, which is about 166 km long. In the future, ADB stands ready to provide further assistance to increase the transit capacity of Azerbaijan's main transport corridors.

One way or another, the dialogue with ADB evolves upwards, including the convergence of the government's and the Bank's plans for future cooperation. Among other things, these and other issues of regional and global significance will be discussed during the 56th annual meeting of the ADB Board of Governors that began on May 1 in Incheon, Republic of Korea. Azerbaijan is represented at the meeting by a delegation headed by Samir Sharifov, Finance Minister and member of the ADB Board of Directors. The theme of this year's annual meeting is "Rebuilding Asia: Recovery, Reunification and Reforms". Some five thousand participants, including finance ministers, central bank governors, senior officials, representatives of the private sector and international agencies, as well as civil society organisations, academia and the media, are expected to attend the representative event on May 1-5.