The World Bank has recommended that Azerbaijan intensify reforms
aimed at improving its business environment and attracting greater
private investment, Azernews reports, citing the
Bank’s latest report.
The institution emphasised the need to enhance tax policy
predictability, ensure a level playing field for businesses, and
strengthen judicial mechanisms to foster investor confidence.
According to the report, Azerbaijan’s Socio-Economic Development
Strategy for 2022–2026 prioritises diversifying the economy,
reducing dependence on hydrocarbons, and expanding the role of the
private sector. “The success of these goals depends on boosting
investment levels — particularly private investment in the
non-hydrocarbon sector,” the report noted.
World Bank experts said increasing private investment outside
the energy sector will require structural reforms to remove
barriers to doing business. “The Azerbaijani government continues
to make consistent efforts to support the private sector by
improving the business climate,” the report added.
Analysts highlighted that regular consultations between the
public and private sectors are key to resolving investment
challenges. One proposal is the adoption of a medium-term tax
framework that would inform businesses in advance about planned tax
changes, a step the Bank believes would enhance predictability and
reduce uncertainty for investors.
To create equal conditions for market participants, the Bank
recommended strengthening the legal and institutional base for
competition and adopting regulations to ensure compliance. It also
suggested promoting competition neutrality and separating the
state’s regulatory and operational roles, especially in sectors
dominated by state-owned enterprises, to enable greater private
participation.
The World Bank further advised developing a state aid control
framework to limit market distortions arising from government
support for specific enterprises or industries.
The report stressed the importance of establishing a long-term
commitment to targeted business climate reforms, with participation
from both public and private stakeholders, to enhance policy
predictability and reduce market uncertainty. It also called for
stronger institutional support for SMEs through agencies such as
SMBDA, AZPROMO, and AzExport, helping them expand access to
domestic and international markets.
In addition, the Bank encouraged Azerbaijan to continue
implementing judicial reforms and address gaps in the legal
framework, including dispute resolution mechanisms for intellectual
property rights.
“Implementing structural reforms that remove these constraints
can stimulate private investment inflows and further support the
diversification of Azerbaijan’s economy,” the World Bank
concluded.
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