World

UNCTAD, Azerbaijan Seal Pact On Debt Management

By Akanimo Sampson

The United Nations Conference on Trade and Development (UNCTAD) and the Republic of Azerbaijan have sealed an agreement to help the country better manage its public debt.

PHOTO: The Asian Regional Public Debt Management Forum took place in Baku. The three-day forum was co-organized by Azerbaijan’s Ministry of Finance and the Asian Development Bank (ADB).

In 2018, the country’s public debt was $8.80 billion. This implies that the debt in 2018 reached 18.75% of Azerbaijan GDP, a 3.76 percentage point fall from 2017, when it was 22.51% of GDP.

The evolution of Azerbaijan debt rose since 2008 in global debt terms, when it was $1.6 billion and also in terms of GDP percentage, when it amounted to 3.22%. According to the last data point published, Azerbaijan per capita debt in 2018 was $885 per inhabitant. In 2017 it was $941, afterwards dropping by $56. As at 2008, the debt per person was $177.

Compared with the rest of the world, the country improved in 2018 in terms of GDP percentage. Currently it is country number 10 in the list of debt to GDP and 48 in debt per capita, out of the 186 we publish.

Azerbaijan, according to Wikipedia, is however, in the South Caucasus region of Eurasia at the crossroads of Eastern Europe and Western Asia.It is bounded by the Caspian Sea to the east, Russia to the north, Georgia to the northwest, Armenia to the west and Iran to the south. The exclave of Nakhchivan is bounded by Armenia to the north and east, Iran to the south and west, and has an 11 km (6.8 mi) long border with Turkey in the northwest.

The Azerbaijan Democratic Republic proclaimed its independence in 1918 and became the first secular democratic Muslim-majority state. In 1920 the country was incorporated into the Soviet Union as the Azerbaijan Soviet Socialist Republic.

The modern Republic of Azerbaijan proclaimed its independence on August 30, 1991,shortly before the dissolution of the USSR in the same year. In September 1991, the Armenian majority of the disputed Nagorno-Karabakh region seceded to form the Republic of Artsakh.The region and seven adjacent districts outside it became de facto independent with the end of the Nagorno-Karabakh War in 1994. These regions are internationally recognized as part of Azerbaijan pending a solution to the status of the Nagorno-Karabakh through negotiations facilitated by the OSCE.

Azerbaijan is a unitary semi-presidential republic. It is one of six independent Turkic states and an active member of the Turkic Council and the TÜRKSOY community. Azerbaijan has diplomatic relations with 158 countries and holds membership in 38 international organizations,including the United Nations (since 1992), the Council of Europe, the Non-Aligned Movement, the OSCE, and the NATO Partnership for Peace (PfP) programme.

It is one of the founding members of GUAM, the Commonwealth of Independent States (CIS) and the Organisation for the Prohibition of Chemical Weapons. Azerbaijan also holds observer status in the World Trade Organisation.

While more than 89% of the population is Shia Muslim, the Constitution of Azerbaijan does not declare an official religion and all major political forces in the country are secularist. Azerbaijan has a high level of human development according to the Human Development Index.It has a high rate of economic developmentand literacy,as well as a low rate of unemployment.However, the ruling party, the New Azerbaijan Party, has been accused of authoritarianism and human rights abuses.

In the mean time, UNCTAD Secretary-General, Mukhisa Kituyi and the country’s Finance Minister, Samir Sharifov, signed the agreement on October 25 in the capital, Baku, on the sidelines of the 18th Summit of the Non-aligned Movement.

The agreement covers the procurement and implementation of UNCTAD’s debt management and financial analysis system (DMFAS).

Financed mainly by the Swiss State Secretariat for Economic Affairs (SECO), with further support from the Asian Development Bank (ADB), the project aimed at improving Azerbaijan’s management of public debt and guarantees will run for three years

Minister Sharifov outlined the reforms conducted by his country in the areas of public financial management, public debt management and a newly adopted public debt management strategy during the signing ceremony attended by representatives of SECO and ADB.

“It’s hard to imagine the development of a contemporary financial system without debt. However, proper management of the debt can create economic growth and development,” Mr. Sharifov said.

Kituyi lauded Azerbaijan’s successful management of the country’s recent economic crisis and expressed UNCTAD’s readiness to render technical assistance and continue positive cooperation with the government.

“A more efficient public debt management system is imperative for sustainable economic growth, better governance and poverty alleviation”, Kituyi said, adding that an efficient public debt management system would facilitate transparency and accurate reporting of domestic and private debts.

UNCTAD will supplement the implementation of DMFAS with capacity-building activities to boost national capacity in the collection of reliable debt data and effective reporting – key success criteria of the project.

Maximising synergies with UNCTAD’s research and analytical work on debt management and debt sustainability, the DMFAS programme provides solutions to problems faced by debt management offices in various countries.

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