At the conference on results of implementation of the “State Program of socio-economic development of regions of the Republic of Azerbaijan”

Dear friends,

Five years ago we approved the “State Program on socio- economic development of regions of the Azerbaijan Republic.”. In February 2004, the program’s realization was launched. Today with feeling of deep satisfaction I can tell, that the program has been implemented ahead of schedule and in greater volume. In 2004, the questions of socio-economic development of regions were in the attention center. And today that is the real state of affairs. But the way we have passed for five years, allows telling today, that a number of problems of regions have been solved. In 2004, our primary goal was to achieve development of non-oil sector. That is, in regions it was necessary to create modern powerful infrastructure, new enterprises, and open workplaces so that the national economy developed in diverse. It has huge importance for development of any country. Development of non-oil sector is of great importance, first of all, in the countries rich with natural resources, otherwise, if the economy will not be steady, then successes can be only short-term. And as known, our goal consists in that in the forthcoming years, throughout many years Azerbaijan promptly developed and that our economy did not depend on the oil and gas factor and that, first of all, all conditions were created for good life of people. In fact, the program’s main objectives consisted in this, and all these questions are closely interconnected. Development of regions, on the one hand, serves creation of a powerful infrastructure, opening of workplaces, prevents migratory tendencies. On the other hand, creation of a new, modern infrastructure serves creation of the new enterprises. For last five years, the Azerbaijani state has enclosed huge investments in regions. Along with it, large credits, soft loans have been allocated for private sector development, and big support is rendered to development of entrepreneurship - moral, political, material support. When all these factors unite, of course, it is possible to become successful. And the way Azerbaijan has passed for the last five years is evidence to that.

It is enough to pay attention only to some statistics to be convinced, what great value this program had. For last five years, the economy of Azerbaijan has grown in 2, 6 times, the income has per capita reached 5500 dollars. Industrial production has increased in Azerbaijan in 2,5 times, industrialization process was intensified. It has as a result opened 766 thousand new workplaces, of them, 547 thousand are constant. As a result, poverty level was sharply reduced from 49 to 13,2 percent. Thanks to the successful oil strategy and economic reforms carried out in Azerbaijan, our budgetary expenses have increased more than 12 times. Today our currency reserves exceed 18 billion dollars, which, of course, gives us additional confidence and allows looking ahead with great optimism. That is these statistics confirm that for last five years we have really passed successful way. We see results of it not only in figures, but also in the changed face of our cities, the well-equipped cities, the villages, the laid roads, the constructed infrastructural objects. It allows us today and will allow more dynamically carry out in the future serious political and economic reforms to undertake even more serious steps directed on modernization of Azerbaijan.

Finally, our purpose is to transform Azerbaijan into a developed country that all criteria in Azerbaijan have reached level of the leading, developed world countries. In this direction still much should be made. But realization within five years as programs of social and economic development of regions, and other programs allows telling that we will reach the goal set forth.

In 2004, when the program was accepted, it was impossible to include in it all. The life has made changes to our plans, and for last five years we have solved some questions not stipulated in the program in 2004. And, it was for short term and in all spheres. Today, in Azerbaijan there is no such branch which would not be provided by concrete program. Thus, all accepted programs have concrete character. They are not expression of simply intention and are not accepted on the declarative, propaganda purposes. Each program has concrete mechanisms of implementation, concrete financial base and all technical possibilities. For last five years, we managed to strengthen considerably our technical possibilities. Today, in Azerbaijan at the expense of internal resources it is possible to carry out any construction project. If earlier for realization of large construction projects we addressed to foreign companies, today the local companies show their professionalism. And it allows that the overwhelming majority of works was carried out by the Azerbaijan companies, what means the spent expenses remained in Azerbaijan and that the benefit of it was taken by the Azerbaijan companies, citizens of Azerbaijan.

If the state would not enclose large, milliard investments, today the Azerbaijani companies, certainly, would not have such possibilities. They have found these possibilities basically at the expense of the state orders. It also has expanded their financial possibilities, what, in turn, has led to investing by the said companies in real sector of the economy of Azerbaijan.

I reiterate that all it is interconnected. First of all, there is a political will. On the other hand, concrete programs began to be carried out, and discipline in financial sector was strengthened. The work done in the oil-gas sector, has, of course, expanded our material possibilities, and we very effectively used them. Investments have been enclosed, fine conditions for private sector development created, and large credits were given. Thus, today we with full confidence can tell that the economy of Azerbaijan is already established, and the world financial crisis is felt in Azerbaijan slightly. We should do the utmost as much as possible to reduce possible negative influence of crisis, and I do not doubt that we will achieve it.

Today the potential of development of the economy of Azerbaijan is great enough. The economy of Azerbaijan has received a powerful impulse which continues today. All this in forthcoming years, certainly, will lead to greater diversification of our economy. It will provide long-term, sustainable development of Azerbaijan, and will even more be reduced dependence on the oil and gas factor. Thus, the country will successfully continue developing, and the Azerbaijani people, citizens of Azerbaijan will live every year better. This was one of the major goals set forth in the beginning of 2004. All our affairs, programs, measures should guarantee that the Azerbaijani people lived better, and the dynamics of poverty reduction level distinctly shows it.

This is also true - it is well-known from the world history - that frequently in the countries rich with oil and gas, there is a process of stratification, the rich become richer, and poor becomes poorer. Besides, the reality is that the oil-gas industry does not serve creation of considerable quantity of workplaces. That is, opening of workplaces in this branch has no mass character. In some countries, the more extracted oil and gas, the poorer become the people. In Azerbaijan we see the reverse. For us it was a big test: how to use large financial possibilities and where to direct them on. After all, there were various opinions, sometimes we even hear today, that these means should be used so or on - another. Experience of Azerbaijan and the policy we pursue show, that we used our financial possibilities most correctly, and most reasonably. These financial resources have been enclosed in investments, real sector of economy, power, gasification, transport, public health services and education, humanitarian sphere. Thus, level of services has raised, possibilities have increased, and more favorable conditions have been created for business.

And the most important is that incomes of oil are distributed fairly, our people and the entire world know, what currency reserves Azerbaijan, what incomes and expenses the Oil Fund has, and how these incomes are used. That is, the transparency is provided completely. And this, in fact, is the moment deserving special attention in the countries rich with oil and gas. Azerbaijan is one of the leading countries which have joined the Transparency Initiative.

In 2007, the United Nations Organization has awarded the State Oil Fund of Azerbaijan with a special award for the successes reached in the field of transparency. This transparency is necessary, first of all, for us, the people of Azerbaijan, and the state of Azerbaijan. It should be everywhere. In all financial spheres, in economic sector the maximum transparency is necessary so that we could use the possibilities as much as possible effectively. Certain work in this direction has been done, but in the future it is necessary to do even more. We have huge potential.

We have enormous economic possibilities. We must put our efforts into 100% effectively using them so that we could ensure transparency, and apply world`s best practices in Azerbaijan. When I say that using our possibilities we have to bring our criteria up to the world`s progressive level, I mean it as well. They achieved it not at the expense of oil and gas. Developed countries achieved it, first of all, thanks to the effectiveness of their economy, transparency, democracy, radical reforms, technological progress and education. We need to develop our country at faster pace, adopting their experience.

For the past five years, we dealt with not only economic issues. I want to say once again that one of our goals facing us as early as five years ago was that we should not forget about solving social problems in the market economy. On the contrary, they must be in the center of attention. Principles of market economy are relatively new to us. The share of the private sector in the economy of Azerbaijan was at a zero level 17 years ago. Now it makes up 85%. It means we lived in the system without principles of market economy in Azerbaijan. Within short time, we achieved it. The major part of our economy is based on the market relations, and now it is effectively working.

At the same time, it is a reality that in some cases attention to the economy only does not serve all-round development of the country. Solving social problems, social programs, targeted social assistance, creating social infrastructure were the priority issues for us, and for the past five years, good results have been achieved in this area. For the past five years, the minimum salary in Azerbaijan increased 8.3-fold, minimum pension 4-fold. Huge funds were injected into rebuilding and creating social infrastructure. For the past five years, 1600 schools have been built at a modern level as they were provided with computers. Hundreds of medical centers have been built over the past five years in various regions of our country. 8 of them are treatment and diagnostic centers, which meet highest world standards. They are located in various regions of the country. Construction of eight more treatment and diagnostic centers is under way today.

Sport facilities, Olympic sport complexes - 10 Olympic sport complexes have been built for the past five years. It all serves citizens of Azerbaijan, development of Azerbaijan. We have already managed to build a modern social infrastructure in the regions, which not a bit lags behind that in the most developed countries. So many museums, theaters, cultural centers have been repaired so far. We will need a whole day to count them.

I want to say once more that our work was comprehensive. It targeted not only the separate area. We defined every task, every problem facing our country and took necessary measures to solve them.

I think we have achieved a historical success for the past five years - shutting down refugee camps. In 2003, I said there will be no camp. Today, they exist no more. New settlements and new infrastructure was created instead.

We have solved the greater part of problems in the transport sector over the past years. Four airports in Nakhchivan, Ganja, Zagatala and Lankaran have been built. Perhaps, Lankaran is situated not so far from Baku, and there is no influx of passengers now, especially, given construction of beautiful roads today just like the Zagatala airport. Possibly, some may say that it is not a priority. But I think that it is priority as it serves our strategic interests. Today, we have them, and they will serve Azerbaijan to a greater extent in the future. Both intercity, trunk roads and modern roads are being built to the most remote villages.

Today, one might say, we have provided our tanker fleet to the maximum, cargo traffic is on rise in the Caspian. With cargo traffic increasing, railway is operating more intensively and more jobs are being created. Construction of highways, which are being built in all directions, was intensified. After the road is built, that region starts experiencing boom. Sometimes, during my trips to the regions, some told me that a village may not need a medical center, but we can travel to the center of the region without problems and easily solve all our problems.

Doing this job, we pursued one goal: to create all-round infrastructure potential of Azerbaijan, ensure good service for people. We invested huge funds into the market economy, solving social problems, implementing huge infrastructure projects, state supporting the persons running their own business and developing agriculture. When we established “Agroleasing” joint-stock company I set a task to acquire good equipment at the expense of the state budget within short time and lease them to farmers so that they could use this equipment, work in agriculture, earn money and give produce to the country. Then, we saw that it does not fully lead to the results we expected. What did we do? On preferential terms we gave fertilizers to farmers for 25% of their price. Then, fuel and seeds. Great attention was paid to melioration, and area of irrigated lands was enlarged. Thanks to this, we received 300-400 thousand tons of grain more during this year. I mean farmers when saying “we” since agriculture in Azerbaijan is totally working on the basis of private principles.

Thus, we ensure food security. Today, food security already became a topic for discussions. Next year, we will pay more attention to this area.

Countries, whose energy, food and transport security is not ensured today, face big problems and will face in the future. We can see some countries can not live at their own expense. They ask for loans from international financial institutions and other states. It is understood that he who pays the piper calls the tune. We can see first manifestations of this, and one cannot except, it will take place to a greater extent in the future.

Thus, perhaps, those countries, willing or not, will, in some extent, limit their independent policy. Azerbaijan is the country, which can totally supply itself. I can say that we are receiving loan requests from other countries.

Security is, at the same time, a food security as well. Before coming here today, I once more became familiar with the exhibition downstairs, products of industrial enterprises produced in Azerbaijan in recent years. I made sure we can fully supply ourselves. Today, we supply ourselves with the food stuff. Good up-to-date reprocessers meet our needs and have a good export potential. It is a very positive fact since export potential is an evidence of high quality of goods.

In the future, agriculture will be developed more by new programs, and we have to pay a maximum attention to this sphere. This is a matter of security, and at the same time, economic and social issue since, half of the population of Azerbaijan lives in agricultural regions.

I want to say that we have done so much for the past five years that it will take much time to count all. I want to dwell on some points. Great attention was paid to power industry as it is the basis of economy. Over the past five years, nine electric power stations have been built in Azerbaijan with their total generating capacity of about 1000 megawatt. Stations have been constructed in various regions of our country. Thus, we introduced our principle of diversification in this sector as well. On one hand, it helps to reduced losses; on the other hand, it is necessary to create a powerful energy potential in every region. This year, two more stations with the capacity of 600 megawatt will come on stream. Two more stations with the capacity of about 1000 megawatt are under construction. Thanks to our work, about 3000 megawatt of additional capacity will be created in the power industry. Maximum capacity of power stations created ever in the history Azerbaijan made up 4500 megawatt. It is a great success both for today and for future. In the following years, we will start developing renewable energy. The instruction was given to effectively use water sources, rivers. We will deal with solar and wind energy but more calmly as major part of work will be already done.

Gas supply process has been developing at a high pace over the past five years in Azerbaijan. Five years ago, only 60-62% of Azerbaijan was supplied with gas. It now comes to 85% with a task to increase it to 93-95%. There is no need to increase it more as we can use other means. Over the past five years, eight regions started receiving gas. After the 13-year interruption, gas supply was resumed to the Nakhchivan Autonomous Republic. Today, Nakhchivan has been fully supplied with gas. Gas started flowing into Agjabedi, Imishli, Beylagan, settlement of Guzanly in Agdam region, town of Goradiz in Fuzuli region. Gas pipelines were laid in Yardimly and Lerik, which have never received gas before. People who have experience in this sphere know what it is since construction of gas pipeline to mountainous regions is a great problem from the technical point of view and it requires much money. We have done this. Today, there is no region in Azerbaijan, which is not receiving natural gas, and we will continue our work. On one hand, it brings convenience to the people, and on the other hand, it helps to establish new enterprises. No enterprise can be created without electricity and gas. It is not a secret.

Completing my speech, I want to reiterate that adoption and successful implementation of the state program on socio-economic development of regions is a great success for us. I can say that it is a historical achievement. In the following five years, we will continue our policy in this direction on this wonderful basis. Notwithstanding all economic and financial crises, we will continue our policy. We will continue our efforts for overall development of Azerbaijan to make our country richer and our people live better.

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