The European Union (EU) announced a new assistance package to Azerbaijan. The €13.5 million will help diversify Azerbaijan’s economy by providing assistance in the areas of finance, economics and judicial governance.
The €13.5 million bilateral assistance package will go towards:
- enhancing the competitiveness of Azerbaijan’s small and medium sized enterprises (SMEs).
- promoting new export opportunities for SMEs.
- helping government institutions implement business-friendly policies.
Diversifying the economy
The objective of funding package is to help Azerbaijan diversify its economy. Currently, the oil industry dominates the country’s gross domestic product (GDP). By supporting SMEs, the funding encourages non-oil GDP growth and job creation.
Key actions include:
- modernise relevant institutions, regulations and the business environment.
- capacity building initiatives for SMEs and entrepreneurs to further develop skills, gain access to finance and establish an international network.
- introduce alternative means of dispute resolution.
- increase accountability in how financial institutions collect public expenditures and revenue.
Bridging the economic divide
Over the past decade, Azerbaijan’s economy has grown considerably and, as a result, there has been a substantial reduction in poverty. However, disparities still remain, particularly between oil-rich companies and the rest of the country and between urban centres and rural areas.
To bridge this divide, economic diversification is essential. This funding agreement confirms the EU and Azerbaijan’s willingness to move forward together in achieving these goals. It also lays the groundwork for upcoming negotiations on a new bilateral agreement.
Funding source
The funding comes through the European Neighbourhood Instrument (ENI), under the Technical Cooperation Facility. ENI is the main financial and cooperation instrument through which funding is provided to European Neighbourhood Policy (ENP) countries, of which Azerbaijan is part of.