The World Bank has urged Azerbaijan to accelerate structural reforms aimed at improving the business environment and attracting more private investment, particularly outside the oil and gas sector.
According to a new World Bank report, the country’s 2022–2026 socio-economic strategy outlines a shift toward a diversified, private sector–driven model of growth – but achieving this goal will depend on boosting investor confidence through greater policy predictability and a level playing field for businesses.
Policy Predictability and Tax Reform
The report calls for the adoption of a medium-term tax framework to provide advance notice of upcoming fiscal changes, thereby reducing uncertainty and increasing business confidence. Ensuring the stability and transparency of tax policy, it notes, is essential for attracting long-term investment.
Fair Competition and Market Access
To foster equal conditions for all market participants, the World Bank recommends strengthening competition laws and enforcement, as well as adopting clear secondary regulations to ensure the implementation of antitrust norms.
It also advises separating the regulatory, policymaking, and operational functions of state-owned enterprises to allow greater private sector participation in key industries.
The Bank further suggests introducing competitive neutrality principles in line with international standards – ensuring that private firms are not disadvantaged compared to state entities.
Judicial Reform and Investor Protection
The report highlights the importance of judicial efficiency and stronger dispute resolution mechanisms, especially in the protection of intellectual property rights. Continued reforms in the legal sector, it says, will help address gaps that currently hinder investor confidence.
Support for SMEs and Export Promotion
The World Bank also calls for enhanced support to micro, small, and medium-sized enterprises (MSMEs) through improved access to domestic and foreign markets. It recommends expanding services provided by SME Development Agency (KOBIA), AZPROMO, and AzExport to better target the needs of entrepreneurs.
Public-Private Dialogue
Regular dialogue between the government and private sector will be key, the report stresses, to identifying and removing obstacles to business activity. The World Bank encourages Azerbaijan to maintain long-term commitments to reform, ensuring consistency and collaboration across all stakeholders.
“Implementing structural reforms that remove existing barriers could stimulate private investment and drive further diversification of the economy,” the report concludes.
