Azerbaijan has continued the trend of rapid economic growth, driven by energy-related foreign direct investment, while nearly half of the population remains mired in poverty. The year 2004 was the first year of the Presidency of Ilham Aliyev and the second year of the country's three-year PRSP, the State Programme for Poverty Reduction and Economic Development (SPPRED). Despite continuing problems in governance-including barriers to economic activity and weak institutional capacity in many areas-the Government has shown the political will to pursue broad-based economic development and poverty reduction in a number of ways.
With coordinated support from the agencies of the UNCT, the SPPRED Secretariat of the Ministry of Economic Development continued to build capacity to monitor poverty in all its dimensions. The participatory process used to develop the SPPRED, involving 15 sectoral working groups, further expanded during 2004. A major achievement was the production of the world's first integrated MDG/PRSP Report, Azerbaijan Progresses Toward the Achievement of the MDGs: Annual Report 2003. A series of ten Town Hall Meetings, each preceded by interviews and focus group meetings, informed the Government's preparation of the Report and its sequel for 2004 (to be released in 2005). The Government also adopted a State Programme on Socio-Economic Development of the Regions, developed a National Employment Strategy, and continued implementing its National Information and Communication Technologies Strategy (NICTS). The Government and its partners in the oil and gas sector committed to managing state hydrocarbon revenues transparently through the Extractive Industries Transparency Initiative (EITI), and the Government adopted a Long-term Strategy on the Management of Oil and Gas Revenues to guide the use of these revenues to the benefit of both current and future generations.
The MDG/SPPRED Report for 2003 set forth the country's progress toward the MDGs and the obstacles it faces in a straightforward manner. The acknowledgement of discrepancies between official and survey data in the health sector marks a notable step toward resolving these discrepancies. The Report's principal findings on each MDG were as follows:
- MDG 1: Poverty and Hunger. Azerbaijan will use per capita consumption expenditure, rather than income, to measure poverty, and the SPPRED Secretariat has proposed that, given prior data and methodology limitations, 2002 should be the baseline year for poverty measurement. In 2002, the poverty rate was 46.7 percent, the extreme poverty rate was 11 percent, the share of the poorest quintile in national consumption was 15.1 percent, and the poverty gap ratio was 0.082 (i.e., the depth of poverty was such that the average consumption expenditure of the poor population was 8.2 percent below the poverty line). Data relating to malnutrition is under discussion.
- MDG 2: Education. Azerbaijan has already achieved universal primary education and almost universal literacy. The challenge facing the country in the education sector is to achieve universal secondary education and to improve the quality of education at all levels.
- MDG 3: Gender. Azerbaijan does not have gender disparities in literacy rates or in enrollment in primary and secondary education. Attendance rates need to be monitored for gender disparities, however, and females are less likely than males to attain higher education. Indicators and targets will focus on women's access to higher education and to top positions in economic and political life. Indicators for women's political participation and wage employment remain to be defined.
- MDG 4: Child Mortality. Discrepancies between official data and survey estimates continue to complicate the discussion of indicators, baselines, and targets. The Government, UN agencies, and other partners are working to resolve these discrepancies.
- MDG 5: Maternal Health. Discrepancies between official data and survey estimates continue to complicate the discussion of indicators, baselines, and targets. The Government, UN agencies, and other partners are working to resolve these discrepancies.
- MDG 6: Combat HIV/AIDS, Malaria, and Other Diseases. Reliable data related to HIV/AIDS are not currently available. Other diseases of concern in Azerbaijan are malaria, tuberculosis, and brucellosis. Discussions on monitoring HIV/AIDS and other diseases are underway.
- MDG 7: Environmental Sustainability. Data and indicators for many environmental concerns need to be improved and refined. Setting targets for land area covered by forest or protected for biological diversity will require sensitivity and local participation to ensure that the poor are not deprived of land and energy supplies. Azerbaijan may set a target for access to piped water in rural areas, where access is sharply limited (11 percent in 2002). Rather than setting a target for improving the lives of slum dwellers, Azerbaijan is considering a target for resettling IDPs and ensuring their access to sanitation.
- MDG 8: Global Partnership. Azerbaijan may adopt the goal of increasing FDI in the non-oil sector, in line with SPPRED's strategic aim of creating an enabling environment for income-generating opportunities and promoting economic development beyond the oil sector and the Absheron peninsula.
The Government has ambitious intentions for its fight on poverty in 2005. These include identifying country-specific MDGs, indicators, baselines, and targets, costing the MDGs, and preparing a Ten-Year Development Programme leading to MDG achievement in 2015. The success of this agenda will require the incorporation of economic growth forecasts, linkages with the state budget, and, accordingly, greater coordination with the Ministry of Finance.
The Government's commitments to developing capacity and implementing policies for poverty reduction and MDG achievement create an atmosphere of hope for 2005. This will be the year when oil begins to flow through the newly constructed Baku-Tbilisi-Ceyhan pipeline, creating a growth rate of about 40 percent in the oil sector, which now comprises one-third of the economy. Construction of the South Caucasus gas pipeline will continue, with the expectation that it will become operational in 2006, stimulating another boost in the energy sector. The year 2005 will be important politically as well as economically, with the first parliamentary elections during the Government of President Ilham Aliyev. Given the turmoil surrounding recent elections in other former Soviet republics, Azerbaijan's 2005 parliamentary election is likely to be carefully scrutinized.
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