OPEC Fund and Azerbaijan sign Investment Encouragement and Protection Agreement



November 19, 2002
Vienna, Austria

An agreement for the encouragement and protection of investment was signed today between the OPEC Fund for International Development and the Republic of Azerbaijan. Drawn up within the framework of the Fund's Private Sector Facility, the convention was initialed by H.E. Mr. Farhad Aliyev, Minister of Economic Development of the Republic of Azerbaijan, and by H.E. Dr. Y. Seyyid Abdulai, Director-General of the OPEC Fund.

The Fund's Private Sector Facility is a financing window, endowed with its own resources, through which the Fund channels support directly to the private sector in developing countries. The objectives of the Facility are to promote economic development by encouraging the growth of productive private enterprise and supporting the development of local capital markets. Under the Facility, loans are made to financial institutions for on-lending to small, medium and micro-enterprises, as well as directly to specific projects. Equity participation in private enterprises is also undertaken, either directly or through country or regional investment funds. As a pre-condition to such investment, the Fund requires signature of a standard agreement with the country concerned for the encouragement and protection of investment. The agreement accords the OPEC Fund the same privileges as those normally given to international development institutions in which the country holds membership.

Azerbaijan's macroeconomic performance remains strong, with continuing high growth and low inflation. In 2000, real GDP growth reached 11%, with the non-oil economy increasing by 13%, trends which continued during the first quarter of 2001. The country's gross national income (GNI) amounted to US$5.3 billion and GNI per capita was estimated at US$660 during 2001. Government is implementing a number of structural reforms that include developing the non-oil sector, strengthening governance, fostering private sector development and enhancing financial discipline in order to achieve a more balanced economic growth. This and other measures have greatly enhanced openness and competitiveness, and have helped create a hospitable, enabling environment for the promotion of enterprises in the country's private sector, which is regarded by government as critical to the economic development of the country.