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FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT OCTOBER 2005
BAKU INTERBANK CURRENCY EXCHANGE
ECONOMIC AND POLITICAL DEVELOPMENTS
Politic and Economic Environment:
Baku, Azerbaijan's capital and largest city
emerged more than 100 years ago as one of
the earliest centers of the international
petroleum industry. At the beginning of the
21st century, oil and gas activity remains the
engine of the Azerbaijani economy. Indeed,
oil exports accounted for 90% of all exports
in 2002. It appears that oil development in
the Azeri sector of the Caspian will fuel
economic development and income growth
for many years to come, especially after
official sanctioning of the Baku-Tbilisi-
Ceyhan (BTC) pipeline, which will pump
Azeri oil through Georgia and Turkey to the
Mediterranean terminal at Ceyhan, Turkey,
and related projects, which will inject an
estimated US$ 8 billion in investment over
the next few years.
In August 2003, the parliament of Azerbaijan
elected President Aliyev's son, Ilham Aliyev,
as the prime minister. The measure was
viewed as an attempt to secure a peaceful
political transition, in the event that the ailing
president were to become incapacitated.
President Aliyev was scheduled to run for a
third term in the presidential polls in October
2003, but withdrew from the election contest
due to health concerns. His supporters
transferred their efforts to his son, the new
Key Information Contacts
National Bank www.nba.az
State Committee for Securities www.scs.gov.az
Ministry of Finance www.maliyye.gov.az
National Depository Center www.mdm.az
International Bank of Azerbaijan www.ibar.az
National Bank of Azerbaijan www.nba.az
State Committee for Securities www.scs.gov.az
Ministry of Finance www.minfin-az.com
Ministry of Economic Development www.economy.gov.az
ECONOMIC RATIOS
Domestic
savings
PAGE 50
Azerbaijan
Lower-middle-income group
Trade
Indebtedness
Investment
Prime Minister Ilham Aliyev. The younger
Aliyev went on to win the election in a
landslide victory.
In December 2003, Heydar Aliyev died in a
United States hospital at the age of 80.
He was undergoing treatment for heart and
kidney problems.
In 2004, bilateral relations with Armenia
constituted one of the main issues facing
Azerbaijan's political landscape. The new
Azerbaijani president expressed his hope
that the Organization for Security and
Cooperation in Europe (OSCE) would
continue in its effort in forging a resolution to
the conflict in Nagornyy Karabakh.
On the domestic front, President Aliyev has
expressed confidence in the economic
growth of Azerbaijan in the next few years, as
well as the strengthening of democracy and
the improvement of human development
concerns. In these regards, he said, "Our
assuredness stems from the considerable
investments in Azerbaijan, the development
of democratic reforms, and the
implementation of social programs to
improve people's quality of life."
GROWTH OF INVESTMENT AND GDP
(%)
90
60
30
0
97
GDI GDP
Economic Performance:
Foreign direct investment in the petroleum
sector boosted GDP growth to 11.2% in
2003 compared to 10.6% in 2002. Consumer
price inflation has been restrained in recent
years, declining slightly to 2.2% in 2003 from
2.8% in 2002. Fiscally speaking, Azerbaijan's
deficit increased in 2003, to nearly 2%,
compared to 0.5% in 2002, but this was
primarily due to infrastructure-related
expenditures and an increase in pension
wages. Agricultural work still occupies some
40% of the Azeri workforce, and the
unemployment rate has remained low (at
1.4% in 2003). Although oil revenues
represent a large portion of Azerbaijan’s
economy, they have made inroads into this
problem, with non-oil economy growing
significantly in 2003. 1
1 Economic and Political Overview, County Watch
Incorporated, 2005
98 99 00 01 02 03
* World Bank reports