Azerbaijan is a secular,majority-Shiite, oil and gas-rich country whose per-capitaincome quadrupled in real terms during the period 2004-10.While rising incomes have reduced poverty, steps towards amore secure, diversified economy are held back by a publicsector that rests on vested interests, patronage-basedincentive structures, and ingrained patterns of behaviorthat include significant rent extraction, particularly fromthe non-oil economy, with minimal checks and balances fromParliament, the private sector, and civil society. Bankengagement in Azerbaijan at the country level focused onareas which had government support. Some modest results havebeen achieved, even though in many cases modern laws andpractices were adopted without adequate plans forimplementation. At the project level, the Bank has supportedthe strengthening of project implementation units (PIUs) andtools for monitoring, and governance and institutionalfilters have signaled that Governance and Anticorruption(GAC) processes need to be embedded in the Bank projects. Atthe sector level, the Bank's work was highly relevantin supporting oil revenue transparency, primary education,roads, and the development of safeguards. It wassubstantially relevant in public financial management, andprivate sector development and procurement. Bank engagementwas moderately relevant in decentralization, civil servicereform, and accountability institutions.
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