Azerbaijan

• Total external debt: $4.3 billion (World Bank, 2008)
• Total external debt payments: gives $298 million each year to the rich world in debt payments. (World Bank, 2008)
• Population: 8.7 million (World Bank, 2008)
• Percentage of adults who can read and write: 98.8%
• Average life expectancy: 71 years (World Bank, 2008)
• HIV prevalence: 0.1%
• Total health spending: 0.9% of GDP (2003)
• Total spending on debt service payments: 0.7% of GNI (2008)
• Gross National Income (GNI) : $40.9 billion (World Bank, 2008)
  
  

Recent history
Azerbaijan was part of the Russian Empire, and later the Soviet bloc, gaining independence when the latter collapsed. A conflict with Armenia over the Nagorno-Karabakh region, whose population is predominantly Armenian, swiftly followed and although a peace deal was signed in 1994, much of the territory remains occupied.

Background
Azerbaijan has been famed for its oil reserves since ancient times. At the start of the 20th century it was supplying almost half the world’s oil. In 1994 it signed a deal with Western oil companies to develop its oil and gas reserves: the economy as a whole has seen little benefit from this investment however. Oil flows through the controversial Baku-Tbilisi-Ceyhan pipeline, which has raised serious environmental concerns.

Ilham Aliyev took over as president from his father, Heydar, in 2003. Despite elections, the regime’s commitment to democracy has been widely criticised, as opposition demonstrations have sometimes faced police violence, and the 2003 elections were reported to be marred by voter intimidation, violence and media bias.

Despite the country's natural resources, poverty continues to pose a major challenge for Azerbaijan. In 2005, some 29 percent of the population lived in poverty and 8 percent in extreme poverty. There are significant regional variations in poverty levels, and access to services is limited in rural areas, leading to significant rural-urban migration.

Where has the debt come from?
Azerbaijan gained independence from the Soviet Union in 1991 and much of its debt dates from this era and the immediate aftermath. Azerbaijan was poorer than most Soviet republics at the time of its independence and has since faced many of the challenges that confronted other former post-Soviet transition states: economic decline, a deterioration in social services and infrastructure, and a rise in poverty. The armed conflict with Armenia was also very costly. It led to an influx of over one million refugees and internally displaced people, and disrupted key regional trade and transport links.

Debt cancellation status
Azerbaijan is officially classed as a lower middle-income country by the World Bank. It is therefore not eligible for the initiative or the . This does not take into account the size of Azerbaijan’s external debt in comparison to the value of exports, its domestic debt or what Azerbaijan needs to spend on tackling poverty.

The New Economics Foundation calculates that Azerbaijan requires 35% debt cancellation in order for the government to meet the basic needs of its citizens, such as health, education and infrastructure, without taxing those living below an ethical poverty line of $3 a day.

Sources of information:
BBC, World Bank

Last updated: April 2008