IMF Report 2014 – Azerbaijan

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IMF Report 2014 – Azerbaijan
Since the last consultation in early 2013, the government has succeeded in concluding historic agreements in the gas sector and in tapping the international financial markets. The agreements extend cooperation with a BP-led consortium over the next 40 years and enable the implementation of the Shah Deniz-2 gas project, including the construction of pipelines to facilitate the delivery of Azeri gas to Europe beyond 2018. These positive developments in the gas sector along with the strong external position of the country paved the way for the issuance of a debut Eurobond by the Azerbaijani government last March, which was well received by investors amid market turbulence in the region. 
 Notwithstanding these achievements, the overarching challenge for Azerbaijan remains to reduce its heavy dependence on the oil and gas sectors while fostering sustainable private sector–led growth. Diversification is a priority given the relatively short horizon of oil reserves and the fact that the wealth associated with gas discoveries is estimated at about one-third of the oil wealth.A more broad-based growth strategy will also help sustain the rapid decline in poverty and inequality since the early 2000s.