Vice president: Digital infrastructure to be Azerbaijan's key support area for ADB - INTERVIEW

The Asian Development Bank (ADB) views Azerbaijan as a key partner in the region and intends to expand its support for the country's sustainable and diversified economic development. The bank focuses on infrastructure, renewable energy, green technologies, and private sector development.

Ahead of the launch of the new Country Partnership Strategy for Azerbaijan (2025-2029), ADB is formulating a long-term agenda aimed at accelerating the transition to a low-carbon economy, developing transport and digital corridors, strengthening financial markets, and enhancing the country's attractiveness to investors. Particular attention is paid to public-private partnerships (PPPs), which are seen as an important tool for economic modernization and engaging private capital in strategic projects.

Asian Development Bank Vice President Bhargav Dasgupta spoke with Report in an exclusive interview about ADB priorities, new opportunities for the private sector, plans to develop capital markets, and the promotion of green financial instruments in Azerbaijan during his visit to Baku on September 29–30.

Report presents the interview:

- What areas of public-private partnership (PPP) does ADB consider as priorities for Azerbaijan in the coming years? Does the Bank plan to expand its involvement in financing such projects, and in which sectors (transport, energy, renewables, digital infrastructure) is this most likely?

- Thank you for this opportunity. I am delighted to be in Azerbaijan to meet with government officials and private sector representatives and discuss how Asian Development Bank's crucial support can accelerate resilient, inclusive and innovative growth across the country.

Recently, we marked an exciting milestone when we signed a Transaction Advisory Service agreement with the State Water Resources Agency (ASWRA). I want to take this moment to extend my warm congratulations to our dedicated team at the Azerbaijan Resident Mission and our Headquarters, as well as our partners at ASWRA, for making this landmark agreement a reality.

This collaboration allows us to support Azerbaijan's first-ever transaction advisory mandate through the Hovsan Wastewater Treatment and Reuse Project. Together with ASWRA, this initiative will enhance sanitation, promote water recycling for agriculture in the Absheron region, and introduce a robust public-private partnership (PPP) model. It's a wonderful example of how ADB is committed to advancing climate resilience and encouraging private sector participation, all while aligning with Azerbaijan's national development priorities.

Within Central Asia, ADB's PPP initiatives have proven to be effective in driving private sector investment across key sectors like education, healthcare, energy, and heating. Alongside these projects, we've also supported capacity building and worked on improving regulatory frameworks to ensure sustainable development. We're looking forward to bringing our experience with implementing these PPP projects to Azerbaijan.

Looking ahead, ADB sees tremendous potential for PPPs to drive infrastructure modernization and economic diversification in Azerbaijan. Our priorities are closely tied to the country's development agenda, focusing on areas such as sustainable infrastructure, renewable energy to accelerate the green transition, and low-carbon transport infrastructure to boost domestic and regional connectivity. Digital infrastructure is also emerging as a critical area for us to support Azerbaijan's ambitions for digital transformation and innovation.

Beyond project financing, we are actively working with the Government of Azerbaijan to create a strong enabling environment for PPPs-this includes enhancing legal frameworks and building institutional capacities. By doing so, we aim to unlock new opportunities for private sector engagement and contribute to Azerbaijan's long-term sustainable growth.

- What role does private sector financing and development play in ADB's new strategy for Azerbaijan? What scale of support is planned in this area, and will the range of instruments be expanded - for example, direct lending, guarantees, equity participation?

- Private sector development is a key pillar of our new Country Partnership Strategy (2025-2029). We see the private sector as a key driver of growth, innovation, and sustainability. We're exploring greater opportunities for private investment in renewable energy, agribusiness, and manufacturing, financial institutions, and trade finance programs while working with state-owned enterprises to enhance their corporatization.

Collaboration is key. By working closely with the Government of Azerbaijan and the private sector, we aim to also ensure that education and skills development align with labor market needs. This includes creating more opportunities for women in higher-paying sectors, fostering green skills, and building a workforce equipped to support Azerbaijan's transition to a greener, more diversified economy.

We're also looking at ways to support small and medium-sized enterprises (SMEs), which are critical for job creation and innovation. To achieve this, we are broadening the range of instruments we can offer. Beyond traditional lending, we're ready to provide guarantees, equity participation, and trade finance to mobilize more private capital. Our aim is to not only fund projects but also de-risk investments and attract other partners to join us in financing transformative initiatives. By leveraging these tools, we hope to help Azerbaijan unlock its full economic potential, foster a resilient private sector, and align with the country's vision for sustainable and inclusive growth.

In terms of scale, at this year's Annual Meeting in Milan, President Kanda laid out a bold vision to step up our private sector engagement-and we're already putting that into action. Over the past few years, we've more than doubled our private sector operations, and now we're aiming to quadruple annual private investment financing to $13 billion by 2030. This will include mobilization of greater private capital for Azerbaijan.

- How is ADB planning to support Azerbaijan's capital markets development?

- ADB is keen to support Azerbaijan in strengthening its capital markets which is key to mobilizing long-term finance and attracting private investment. Bond issuances in local exchanges, particular in local currency, is among our priorities.

When it comes to growing the local bond market, we're focused on taking practical, hands-on steps. Currently, we're discussing the possibility of ADB issuing bonds locally, partnering with private issuers, and working to strengthen the regulatory framework to help create a more enabling environment for market growth. We are also considering pursuing a pilot ESG bond targeting state-owned enterprises or infrastructure projects. This would set a strong benchmark and foster private capital.

On the regulatory side, ADB is also excited to support Azerbaijan in advancing green and sustainable finance-whether it's helping develop a green taxonomy and ESG standards, supporting pilot green bonds for private issuers, or tapping into innovation to promote fintech and other sustainable finance solutions.

We've seen great success with this approach in Georgia and the region, where we helped launch the Caucasus' first green and sustainability-linked bonds in both USD and local currencies. This was possible due to close partnership with regulators, local banks, and corporates (both private and state-owned). ADB can bring this experience and expertise to Azerbaijan, and we'd also be happy to help facilitate peer exchanges among key stakeholders.