World Bank2013-06-102013-06-102003-04-03https://hdl.handle.net/10986/13825Azerbaijan has experienced robust economic growth during the past seven years, aided by its oil sector development. Nevertheless, poverty is still pervasive and social indicators have deteriorated. The oil and gas windfall will be of undoubted benefit to the country and its citizens if combined with a very careful macroeconomic policy and fiscal stance, as well as steadfast implementation of the structural reform program and poverty reduction strategy. The experience of other resource rich countries has often been disappointing and left large strata of the population in continued poverty. The main challenge for Azerbaijan is to design and implement a policy agenda that leads to poverty reduction and improves incomes as well as equity, while maintaining macroeconomic and financial stability. This Public Expenditure Review (PER) focuses on the public expenditure part of the overall policy agenda. Its main objective is to provide a framework for more efficient use of public resources and more effective poverty reduction efforts. This framework is designed to be consistent with the maintenance of overall macroeconomic stability and with sustainable economic growth in the non-oil sector. The macroeconomic achievements over the past five years have been encouraging. Continuing these achievements, however, may present a greater challenge to the authorities in the coming decade. The relatively speedy accumulation of fiscal revenues related to the oil and gas windfall will create heavy spending pressures. Using these funds unwisely or out of the context of a sound vision of the country's sustainable economic development path will create macroeconomic instabilities, inefficient and non-competitive non-oil activities, or both. The basic conclusion and simple recommendation of this PER is that Azerbaijan follow a fiscal strategy consistent with sustainable development of the non-oil sector, while over time mending institutional weaknesses and structural deficiencies, and investing in its people.en-USCC BY 3.0 IGOADJUSTMENT POLICIESANALYSIS PROCESSANALYTICAL WORKANNUAL GROWTHASSET MANAGEMENTAUDITSAUTHORITYBALANCE OF PAYMENTSBARRELBUDGET MANAGEMENTBUDGET SYSTEMBUDGETARY EXPENDITURESBUSINESS ENVIRONMENTCAPACITY BUILDINGCAPITAL INVESTMENTCASH TRANSFERSCITIZENSCIVIL SOCIETYCPICURRENCY UNITDATA COLLECTIONDEBTDEVELOPMENT ECONOMICSDEVELOPMENT GOALSDEVELOPMENT POLICIESDONOR COMMUNITYECONOMIC COOPERATIONECONOMIC DEVELOPMENTECONOMIC GROWTHECONOMIC MANAGEMENTECONOMIC PERFORMANCEEMPIRICAL EVIDENCEEMPLOYMENTENTERPRISE RESTRUCTURINGEXCHANGE RATEEXCHANGE RATESEXECUTIONEXPENDITURE ANALYSISEXPENDITURE CUTSEXPLOITATIONEXTERNAL DEBTEXTREME POVERTYFINANCIAL INTERMEDIATIONFINANCIAL MECHANISMFINANCIAL SECTORFISCALFISCAL DECENTRALIZATIONFISCAL DEFICITFISCAL MANAGEMENTFISCAL POLICIESFISCAL POLICYFISCAL REVENUEFISCAL REVENUESFISCAL STANCEFISCAL SUSTAINABILITYFOREIGN DIRECT INVESTMENTFOREIGN EXCHANGEFORMAL ECONOMYGAS DEVELOPMENTGAS EXPORTSGAS EXTRACTIONGAS FIELDGAS OUTPUTGAS PIPELINEGAS PRICESGAS PROJECTSGAS RESERVESGAS RESOURCESGAS SECTOR DEVELOPMENTGAS SECTORSGNPGOVERNMENT EXPENDITURESGOVERNMENT REVENUESGOVERNMENT SPENDINGGOVERNMENTAL ORGANIZATIONGROWTH RATEGROWTH RATESHARD BUDGET CONSTRAINTSHEALTH STATUSHUMAN CAPITALHUMAN DEVELOPMENTINCOMEINFLATIONINSTITUTION BUILDINGINSTITUTIONAL ARRANGEMENTSINSTITUTIONAL CAPACITYINSTITUTIONAL FRAMEWORKINSTITUTIONAL REFORMINSTITUTIONAL REFORMSINSTITUTIONAL WEAKNESSESINTEREST RATESLABOR MARKETLIVING STANDARDSLOCAL GOVERNMENTLONG RUNMACRO POLICYMACROECONOMIC CONDITIONSMACROECONOMIC FRAMEWORKMACROECONOMIC MANAGEMENTMACROECONOMIC POLICYMACROECONOMIC STABILITYMACROECONOMIC STABILIZATIONMARKET ECONOMYMEDIUM TERMMINERALMINISTRY OF FINANCEMONETARY STABILIZATIONNATIONSOILOIL AND GASOIL AND GAS SECTOROIL COMPANIESOIL COMPANYOIL FIELDSOIL PRICEOIL PRICESOIL PRODUCTIONOIL SECTORPETROLEUMPIPELINEPOLICY CHOICESPOLICY FRAMEWORKPOLICY MEASURESPOLICY STANCEPOLITICAL ECONOMYPOOR CHILDRENPOVERTY ASSESSMENTPOVERTY COMPARISONSPOVERTY LINEPOVERTY RATEPOVERTY REDUCTIONPOVERTY REDUCTION STRATEGYPRICE STABILITYPRIORITY AREASPRIVATE CONSUMPTIONPRODUCTIVITYPRODUCTIVITY GROWTHPUBLIC EXPENDITUREPUBLIC EXPENDITURE MANAGEMENTPUBLIC EXPENDITURE REVIEWPUBLIC EXPENDITURESPUBLIC FINANCEPUBLIC FINANCESPUBLIC INVESTMENTPUBLIC PROCUREMENTPUBLIC RESOURCESPUBLIC SECTORPUBLIC SERVICESPUBLIC SPENDINGPUBLIC °° SECTORREAL EXCHANGE RATEREAL INTEREST RATESREAL TERMSREDUCING POVERTYREFORM PROGRAMRENT-SEEKING BEHAVIORRESOURCE ALLOCATIONRESOURCE CONSTRAINTSRESOURCE CURSERICH COUNTRIESRURAL AREASRURAL INFRASTRUCTURERURAL POVERTYSAVINGSSECTOR REFORMSSECTORAL ALLOCATIONSSOCIAL EXPENDITURESSOCIAL INDICATORSSOCIAL PROTECTIONSOCIAL SECTORSSOCIAL SERVICESSTATE PROCUREMENTSTRUCTURAL ADJUSTMENTSTRUCTURAL CHANGESTRUCTURAL REFORMSUSTAINABLE DEVELOPMENTTAX REVENUESTECHNICAL ASSISTANCETRANSITION PROCESSURBAN AREASURBAN WORKERSWorld Bank10.1596/13825