Oliver Wyman: Azerbaijan needs to establish Baku International Financial Center

Azerbaijan needs to implement institutional reforms in its financial sector.

According to Report, citing US-based consulting firm Oliver Wyman, analysts believe that to successfully implement a $50-70 billion infrastructure program, Azerbaijan should establish the Baku International Financial Center (Baku IFC), operating under English common law principles.

The company noted that Azerbaijan, which has the strongest macroeconomic position among countries in the region - including an investment-grade sovereign credit rating ("BBB-" from Fitch Ratings), combined reserves of the Central Bank and the State Oil Fund of Azerbaijan (SOFAZ) exceeding $85 billion (112% of GDP), and a relatively low public debt level of 20-21% of GDP - faces a shortage of institutional expertise and an almost complete absence of international investment banks in the domestic market.

Oliver Wyman experts emphasized that strategically important projects - including the reconstruction of Karabakh and Eastern Zangazur ($25-30 billion), construction of the Zangazur Corridor, green energy transition initiatives such as the AZURE project and the Black Sea submarine cable, as well as the development of logistics hubs - cannot be financed solely through the state budget or local banking system.

At the same time, Azerbaijan significantly lags behind regional neighbors such as Kazakhstan and Uzbekistan in attracting non-budgetary capital. Annual financing from international financial institutions (IFIs) in Azerbaijan amounts to only $0.5-0.8 billion, compared with $2 billion in Kazakhstan and $2.5-3 billion in Uzbekistan.

According to the company, Azerbaijan's accumulated debt to export credit agencies (ECAs) stands at $1.6 billion, while Kazakhstan's figure ranges between $12 billion and $15 billion. In particular, only 0.4% of the £5 billion financing limit provided by the UK Export Finance (UKEF) has actually been utilized.

In addition, resources attracted through public-private partnerships and commercial project financing remain at very low levels.

To overcome institutional barriers and transform individual deals into a systematic mechanism for attracting capital, Oliver Wyman recommends that Azerbaijan take three key steps.

The first is the creation of a specialized body for non-budgetary financing - a unified government structure responsible for coordinating cooperation with IFIs, ECAs, sovereign funds, and ministries, as well as maintaining a single registry of prepared projects. Analysts cite Kazakhstan"s Coordination Council for Cooperation with IFIs as an example.

The second step is a proactive approach to international markets: launching a pilot series of 2-3 projects with ECA guarantees worth at least $200 million each in the transport and renewable energy sectors over the next 6-12 months to encourage foreign lenders.

The third step is establishing the Baku International Financial Center. According to Oliver Wyman, Azerbaijan should create a special legal and regulatory zone based on English common law, with an independent judicial body, arbitration mechanisms, preferential tax rules, and a special currency and visa regime.

Analysts highlighted the Astana International Financial Centre, which has operated since 2018, and the Tashkent International Financial Centre, established in Uzbekistan in March 2026, as successful regional examples.

"Without creating such a legal enclave, Baku will continue to face difficulties in attracting the bankers, lawyers, financial architects, and arbitrators needed to transform fiscal potential into completed transactions. The creation of Baku IFC is not an ambitious fantasy. However, since this approach has already become a regional standard among Azerbaijan's neighbors, its absence risks creating a measurable competitive disadvantage, while Azerbaijan has the strongest fiscal position among its regional peers and the highest sovereign rating," Oliver Wyman concluded.