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the first

       of these PSAs, with the Azerbaijan International Operating Company,

       began in November 1997. Azerbaijan shares all the formidable

       problems of the former Soviet republics in making the transition

       from a command to a market economy, but its considerable energy

       resources brighten its long-term prospects. Baku has only recently

       begun making progress on economic reform, and old economic ties and

       structures are slowly being replaced. One obstacle to economic

       progress is the need for stepped up foreign investment in the

       non-energy sector. A second obstacle is the continuing conflict with

       Armenia over the Nagorno-Karabakh region. Trade with Russia and the

       other former Soviet republics is declining in importance while trade

       is building with Turkey and the nations of Europe. Long-term

       prospects will depend on world oil prices, the location of new

       pipelines in the region, and Azerbaijan's ability to manage its oil

       wealth.

      GDP:

       purchasing power parity - $26.65 billion (2003 est.)

      GDP - real growth rate:

       11.2% (2003 est.)

      GDP - per capita:

       purchasing power parity - $3,400 (2003 est.)

      GDP - composition by sector: agriculture: 14.1% industry: 45.7% services: 40.2% (2002 est.)

      Investment (gross fixed):

       50.4% of GDP (2003)

      Population below poverty line:

       49% (2002 est.)

      Household income or consumption by percentage share: lowest 10%: 2.8% highest 10%: 27.8% (1995)

      Distribution of family income - Gini index:

       36 (1995)

      Inflation rate (consumer prices):

       2.1% (2003 est.)

      Labor force:

       4.99 million (2003)

      Labor force - by occupation:

       agriculture and forestry 41%, industry 7%, services 52% (2001)

      Unemployment rate:

       1.1% (official rate is 1.2%) (2003 est.)

      Budget:

       revenues: $2.063 billion

       expenditures: $2.202 billion, including capital expenditures of NA

       (2003)

      Public debt:

       16.3% of GDP (2003 est.)

      Agriculture - products:

       cotton, grain, rice, grapes, fruit, vegetables, tea, tobacco;

       cattle, pigs, sheep, goats

      Industries:

       petroleum and natural gas, petroleum products, oilfield equipment;

       steel, iron ore, cement; chemicals and petrochemicals; textiles

      Industrial production growth rate:

       6.1% (2003 est.)

      Electricity - production:

       18.23 billion kWh (2001)

      Electricity - consumption:

       16.65 billion kWh (2001)

      Electricity - exports:

       700 million kWh (2001)

      Electricity - imports:

       400 million kWh (2001)

      Oil - production:

       307,200 bbl/day (2001 est.)

      Oil - consumption:

       140,000 bbl/day (2001 est.)

      Oil - exports:

       NA (2001)

      Oil - imports:

       NA (2001)

      Oil - proved reserves:

       589 million bbl (1 January 2002)

      Natural gas - production:

       5.72 billion cu m (2001 est.)

      Natural gas - consumption:

       6.72 billion cu m (2001 est.)

      Natural gas - exports:

       0 cu m (2001 est.)

      Natural gas - imports:

       1 billion cu m (2001 est.)

      Natural gas - proved reserves:

       62.3 billion cu m (1 January 2002)

      Current account balance:

       $-2.021 billion (2003)

      Exports:

       $2.605 billion f.o.b. (2003 est.)

      Exports - commodities:

       oil and gas 90%, machinery, cotton, foodstuffs

      Exports - partners:

       Italy 34.1%, Czech Republic 11.4%, Germany 10.5%, France 8.2%,

       Turkey 5.9%, Georgia 4.5%, Russia 4.5% (2003)

      Imports:

       $2.498 billion f.o.b. (2003 est.)

      Imports - commodities:

       machinery and equipment, oil products, foodstuffs, metals, chemicals

      Imports - partners:

       Russia 15.5%, Turkey 12%, UK 8.7%, Germany 8.1%, China 7.8%,

       Ukraine 5.4%, Italy 4.6%, US 4.6%, Kazakhstan 4.3% (2003)

      Reserves of foreign exchange & gold:

       $820.9 million (2003)

      Debt - external:

       $1.575 billion (2003)

      Economic aid - recipient:

       ODA, $140 million (2000 est.)

      Currency:

       Azerbaijani manat (AZM)

      Currency code:

       AZM

      Exchange rates:

       Azerbaijani manats per US dollar - 4,910.73 (2003), 4,860.82

       (2002), 4,656.58 (2001), 4,474.15 (2000), 4,120.17 (1999)

      Fiscal year:

       calendar year

      Communications Azerbaijan

      Telephones - main lines in use:

       923,800 (2002)

      Telephones - mobile cellular:

       870,000 (2002)

      Telephone system:

       general assessment: inadequate; requires considerable expansion and

       modernization; teledensity of 10 main lines per 100 persons is low

       (2002)

       domestic: the majority of telephones are in Baku and other

       industrial centers - about 700 villages still without public

       telephone service; satellite service connects Baku to a modern

       switch in its exclave of Naxcivan

       international: country code - 994; the old Soviet system of cable

       and microwave is still serviceable; a satellite connection to Turkey

       enables Baku to reach about 200

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