Economy

After gaining independence in 1991, Azerbaijan became a member of the International Monetary Fund, the World Bank, the European Bank for Reconstruction and Development, the Islamic Development Bank and the Asian Development Bank. The banking system of Azerbaijan consists of the National Bank of Azerbaijan, commercial banks and non-banking credit organizations. The National Bank was created in 1992 based on the Azerbaijan State Savings Bank, an affiliate of the former State Savings Bank of the USSR. The National Bank serves as Azerbaijan's central bank, empowered to issue the national currency, the Azerbaijani manat, and to supervise all commercial banks. Two major commercial banks are the state-owned International Bank of Azerbaijan and the United Universal Joint-Stock Bank.
Pushed up by spending and demand growth, the 2007 Q1 inflation rate reached 16.6%. Nominal incomes and monthly wages climbed 29% and 25% respectively against this figure, but price increases in non-oil industry encouraged inflation in the country. Azerbaijan shows some signs of the so-called "Dutch disease" because of the fast growing energy sector, which causes inflation.
Two thirds of Azerbaijan is rich in oil and natural gas. The region of the Lesser Caucasus accounts for most of the country's gold, silver, iron, copper, titanium, chromium, manganese, cobalt, molybdenum, complex ore and antimony. In September 1994, a 30-year contract was signed between the State Oil Company of Azerbaijan Republic (SOCAR) and 13 oil companies, among them Amoco, BP, Exxon, LUKoil, and Statoil. As Western oil companies are able to tap deepwater oilfields untouched by the Soviet exploitation, Azerbaijan is considered one of the most important spots in the world for oil exploration and development. Meanwhile the State Oil Fund was established as an extra-budgetary fund to ensure the macroeconomic stability, transparency in the management of oil revenue, and the safeguarding of resources for future generations.
At the beginning of 2007 there were 4755100 hectares of utilized agricultural area. In the same year the total wood resources counted 136 million m³. Azerbaijan's agricultural scientific research institutes are focused on the meadows and pastures, the horticulture and subtropical crops, the green vegetables, the viticulture and wine-making, the cotton growing and the medicinal plants. In some lands it is profitable to grow grain, potatoes, sugar beet, cotton and tobacco. The Caspian fishing industry is concentrated on the dwindling stocks of sturgeon and beluga. In 2002 the Azerbaijani merchant marine had 54 ships.
Some part of most products before imported from abroad has begun to be produced locally (among them are Coca Cola by Coca Cola Bottlers LTD, beer by Baki-Kastel, parquet by Nehir and oil pipes by EUPEC Pipe Coating Azerbaijan).
Azerbaijan is also an important economic hub in terms of the raw materials transportation. The Baku-Tbilisi-Ceyhan pipeline (BTC) became operational in May 2006 and stretches over 1,774 kilometers through the territory of Azerbaijan (440 km), Georgia (260 km) and Turkey (1114 km). The BTC is designed to transport up to 50 million tons of crude oil annually and carries oil from the Caspian Sea oilfields to global markets. The South Caucasus Pipeline, also stretching through the territory of Azerbaijan, Georgia and Turkey, became operational in the end of 2006 and offers additional gas supply to European market from the Shah Deniz gas field. It is expected to produce up to 296 billion cubic metres of natural gas per year. Azerbaijan also plays a major role in the EU-sponsored Silk Road Project.