Closing speech by Ilham Aliyev at the meeting of the Cabinet of Ministers dedicated to the results of socioeconomic development in 2014 and objectives for 2015

10 January 2015, 14:00
Closing speech by Ilham Aliyev at the meeting of the Cabinet of Ministers dedicated to the results of socioeconomic development in 2014 and objectives for 2015

- The tasks facing the country in 2015 are known. We should strive to secure economic development. I am sure that it will be the case. But it is no secret that 2015 will be a very difficult year for the global economy. The processes observed at the end of 2014, of course, will be continued in 2015. The unstable economic situation in the world will continue for some time. The sharp drop in oil prices will, of course, be a test for countries rich in natural resources.

But the policies we carried out in previous years, the diversification, the sound economic reforms, the public and political stability, the unity between the people and the government, as well as our preparedness for crisis situations will, I am sure, allow us the opportunity to successfully complete 2015 as well.

The macroeconomic situation in Azerbaijan is stable. Among the top priorities in recent years we have always pointed to macroeconomic stability. It is important for the country's economy, a very important factor for attracting foreign investment. At the same time, macroeconomic stability is the most important contributor to the welfare of people, and we have secured economic stability over the years. We secured it in the crisis years of 2008-2009. We secured in the past year and we will secure it this year too.

The rate of the manat – as mentioned here – gives us opportunities to address many issues, primarily to enhance the confidence of foreign investors in the dynamic and successful development of our country and provides a quiet life for the population of Azerbaijan. The stability of the manat serves to improve peoples’ lives, and, of course, these factors are important for each country. For each country its national currency is one of the key attributes of independence. The manat is one of the most stable currencies in the world today. I think that if foreign nationals and companies keep their money in manats, they will not lose. The money will remain intact and bring them additional incomes. Many financial institutions of the world are not paying interest on deposits now. Deposits are simply stored as savings.

So I want to reiterate that Azerbaijan has long asserted itself as a part of the world. We are now open to the world, have an open economy, pursue an open policy, the open-door policy. For volume of direct foreign investment Azerbaijan has held a leading position in the region for many years. So we are a part of the global economy. Despite this, our sound policy and the commitment to protect our economy have, of course, contributed to this unique situation. We must protect this. 2015 will be an important year in this direction.

The second important task, and this has also been emphasized over several years, is the development of the non-oil sector. If we hadn’t taken important steps in this direction in good time, the current situation with the oil price could have a very negative effect. But today our non-oil sector is the driving force of the economy, and the non-oil sector growing at a rate of 7 per cent is the result of the work done. At the same time, it gives both investors and local companies additional optimism.

The population also sees and appreciates that. How have we achieved this? First of all, thanks to the implementation of the regional development program, enterprise development, provision of preferential loans to entrepreneurs, a thought-out policy, a policy of industrialization, attraction of foreign investments and the use of oil revenues in the right direction! All of these factors contribute to the development of the non-oil sector.

We are implementing infrastructure projects for the development of the non-oil sector. If these projects were not implemented, there would be no talk of business opportunities in the regions. At the same time, thanks to sound economic policies we have made the right priorities, and their order changes every year. This is natural because we are far from a dogmatic approach. We carry out a flexible economic policy. Increased production for the domestic market is also a factor directly influencing the non-oil sector development, and as a result of all this work and other activities we have ensured sustainable development. The non-oil sector dominates our gross domestic product. In the future, due to a decrease of the oil factor in our gross domestic product, the dependence of the economy on oil will become even smaller. This is our goal. I have always said and want to reiterate today that the oil and gas factor is only a means for us. It is a means of development, building a sustainable and diversified economy. We are effectively using this tool.

This year we will also provide loans to entrepreneurs on preferential terms. This initiative yields excellent results. We are getting convinced of that. This is evidenced by the new businesses and jobs in the regions. At the same time, the state provides great moral support to entrepreneurs. This work should be properly organized on the ground. I would like to recommend to entrepreneurs investing their funds in the real sector of our country this year to use their own funds. The state has provided entrepreneurs with great support for years. The volume of the loans granted on favorable terms accounts for hundreds of millions, perhaps over a billion. Entrepreneurs also need to use these opportunities and, at the same time, as they have accumulated some capital over the years, invest in the development of the country, in the development of the real sector of the economy. At the same time, we need to attract foreign investors to the non-oil sector. Of course, foreign investors are more interested in investing in the oil and gas sector, but we are and will be attracting them to other sectors too. As part of special programs we will create industrial and agricultural estates. All of this will serve to attract foreign investors as well.

On the one hand, the economic crisis is continuing in the world and there is a lack of funds, but on the other, there is not much choice for investment, because no-one wants to invest in countries in crisis. Therefore, it is much easier to attract investment to stable countries, to countries where there is political stability and economic development. A role here is played by a lack of information. However, the presentations and the business forums held in recent years, the communication of useful information about Azerbaijan to the international community, including the business people, have turned Azerbaijan into a very attractive country for investors.

This year, due to the development of the non-oil sector, the role of the banking sector is of particular importance. In recent years our banks have allocated the real sector of the economy a greater volume of loans. I support this, and in an earlier meeting I noted that this area should be given even more credits. We are already seeing that. This is a very positive approach, which demonstrates the responsibility of the banking sector.

I want to emphasize that 2015 will not be an easy year for the world. In 2015, the channeling of banking resources into the real sector of the economy will, of course, be a priority for us. I am sure that banks will continue to speak their word in this direction. Of course, it is necessary to allocate funds for various industrial loans and other projects. Shopping centers, office and residential buildings are under construction in Azerbaijan now. And this is natural because the country's economy is developing and people need such projects. This is also necessary. But the priority for the country's economy now is the funds invested in the real sector.

At the same time, our revenues will reduce this year, of course. Therefore, government agencies should act responsibly. We can’t allow waste. Of course, we will not give our consent to projects that are not a priority. At the same time, we should improve management principles in every state agency and state-owned company. We can’t allow waste. Our agencies should know the value of money. I am sure they are also aware of the situation and will make the right conclusions.

In recent years we spent a lot of money on the economy to ensure the rapid development of our country. I think it was the right policy. This policy provides for today's realities. The investment made in infrastructure projects and the real sector is paying off, and it is thanks to these funds that we can provide for overall economic development. In 2015, all the other projects needed for the country's economy and social sphere will, of course, be implemented in full. I want to say that all social programs will be implemented in full in 2015.

The targeted social assistance, the increasing incomes of the population, the construction of new settlements for internally displaced persons, the construction of homes – all of these programs will be provided. The construction of schools and hospitals will be continued. At the same time, we will implement infrastructure projects, especially projects related to drinking water. At the end of last year and early this year, we allocated significant funds from the Contingency Fund of the President in this direction. This year we will drill at least 300 artesian wells and set up modular water treatment plants in at least 50 villages. So funds for this purpose will be allocated from both the state budget and the Contingency Fund of the President. Among the infrastructure projects, drinking water projects are now a priority for us, and so are rural roads. Last year, a lot of money was allocated for the construction of rural roads. These figures were announced today and this process will be continued in the current year. In accordance with the order I have recently signed, everyone can see that we will continue our policy in this area.

The process of gasification, repair and laying of power lines is under way. These infrastructure projects and land reclamation measures are very important for our country because in 2013 and 2014 we completed two major projects – the construction of the Shamkirchay and Takhtakorpu water reservoirs. These projects hold a very important place in the history of Azerbaijan. We have realized these projects only in the years of independence and they demonstrate once again how strong the state of Azerbaijan is.

In continuation of these projects, we should build canals and put new acreage into circulation. Therefore, land reclamation activities will remain a priority. These projects are directly related to food security. We saw last year too that our plans related to food security were identified and implemented in a timely manner because food security is as important for any country as energy security. Of course, although Azerbaijan imports some food products from foreign markets, we need to try to maximize domestic production and protect ourselves from emergencies. We saw last year that some countries introduced bans on the exports of a number of foods. Therefore, in the interests of self-sufficiency we will continue supplying the domestic market using domestic resources.

The government provides farmers with support here too. As you know, tax breaks have been applied for many years. The state acquires equipment and purebred cattle. For food security reasons we have carried out institutional reforms, established agricultural estates and improved the process of granting subsidies. It is also very important to improve productivity. One of the items on our agenda relates to the growth of our export potential because I am sure that in the near future we will provide ourselves with all basic foodstuffs. Thus, we will have new products to export. If we consider the fact that we are already in the process of setting up about 20 large farms, I am sure that we will be able to fully provide ourselves with wheat in the near future. The productivity of new large farms will be twice the average – 55 quintals per hectare. The country average is 23 quintals. So this new modern approach and, of course, the new opportunities created by public funds will increase our export opportunities in the future, because the government has assumed the main function again. Places have been identified. Farmers have received loans on concessional terms. At the same time, we provide equipment and irrigation. The government has implemented all infrastructure projects in order to improve productivity, so that we could provide ourselves with food to the maximum extent.

Of course, the operation of the Shamkirchay and Takhtakorpu reservoirs is expected to result in the cultivation of new products on tens of thousands of hectares. These places have already been identified, and the process of growing products on these new areas is now starting.

Last year was declared the "Year of Industry". We took many measures associated with the development of industry. I noted in previous meetings that each district should have an industrial zone. A pilot project is already under way. Perhaps this year we will see the start of this project. At the same time, our traditional industrial centers are also expanding their capabilities. Sumgayit, Ganja, Mingachevir and, of course, the city of Baku, especially Garadagh District, are our main industrial centers.

This year we expect to set up a large metallurgical complex. Work on this complex has been under way for some time now. Foreign consultants have been engaged. We can say that the feasibility study is now ready. We have natural resources and ore deposits. Of course, we must strive to make the most of our natural resources to produce finished products on our own. This is our primary goal. In every industry we should be able to produce finished products. This is a project that requires major public funds. Although our revenues will decline now, I believe that this project is a priority for the development of our industry and will help create thousands of jobs. Thus, Azerbaijan will have new products to export, and this will give a further impetus to the economic diversification and development of the non-oil sector. Therefore, there should be no delays in this project. This issue is reflected in the State Investment Program.

The State Investment Program for this year, of course, is different from the programs of previous years because the funds invested by the state will be reduced. And this is natural. But the priorities are correct, and the implementation of the many projects in previous years allows us the opportunity to reduce this investment program. The Takhtakorpu and Shamkirchay are huge projects that required major public funds. Many projects on rural roads and drinking water have already been implemented. But there are priorities, and we should channel public investments into sustainable development because if we don’t do this, there will be emptiness in a few years. We can’t let that happen because, first of all, we should ensure sustainable development of the country. At the same time, job creation is an ongoing process.

In my opening speech I talked about it and want to say again. Some countries are experiencing a demographic crisis. Of course, the worst crisis is a demographic one. The population of some countries is sharply reducing due to natural causes. At the same time, countries are faced with extensive migration. Azerbaijan’s population is growing. It is our great advantage. The bigger the population of Azerbaijan, the stronger we are. But population growth brings with it some problems, including unemployment. Therefore, no matter how many jobs we may create, the need for job creation is always there.

Since the beginning of the state program – from 2004 to the present time – we have created 1,300,000 jobs. By this we have managed to reduce unemployment. But this process should be permanent. To ensure this, we need to create new industrial enterprises. If we consider that there is rapid scientific and technological progress at the present time, all processes are improving and becoming automated, there won’t be a huge need for manpower in the future. Therefore, preference should be given to innovation. We should also ensure the establishment of industrial parks, attract foreign technology and foreign investment. We are already investing public funds, but the state can’t invest a lot in the real sector. This is not right – we can only invest in the establishment of strategic industrial sectors. Therefore, we will continue to pursue a very serious policy in this direction in order to ensure the right process of industrialization.

Issues related to the environment are still a priority. Last year about 4 million trees were planted in Azerbaijan. This is a very positive fact. This process is under way both in the Absheron Peninsula and in all our regions. Oil-polluted areas are being cleaned. At the same time, drinking water and other projects also serve to improve the environmental situation. Work is well under way on Lake Boyukshor. After a few months we will complete the first stage of cleaning Lake Boyukshor. I believe that it will serve as an example for all other similar projects because we are working hard in this area, cleaning all areas, water basins contaminated with oil. Bibiheybat, the White City and Boyukshor. This year we plan to clean Lake Zikh. This is also a very important project. We are gradually cleaning all of the lakes around Baku contaminated with oil and produced water. There will be recreation, entertainment and public places there. In general, numerous public spaces, parks and squares have recently been created in Baku. For the number of such places Baku is perhaps in one of the leading places in the world. Baku is a city of parks and squares today, so Baku will also become a city of clean lakes. I am sure of that. I believe that the completion of the first stage of the cleaning of Lake Boyukshor by the summer of this year will show everyone what we can do. Where there is a strong will, any project can be implemented.

Last year we successfully carried out work related to transport. I have already noted that this year we will continue the construction of a new commercial seaport in Alat. The construction of the Baku-Tbilisi-Kars railway is drawing to a close. It is now being tested. From the Azerbaijani side almost all of the work has been done. I do hope that construction and installation work on all other sites will be completed this year and we will celebrate the opening of this project. This is also a historic project. There were years of negotiations and discussions around this project, but only after Azerbaijan invested its funds and asserted its will did the implementation of the project start.

Other projects related to transportation are also being implemented. New liners are being delivered to our country. Azerbaijan has become the first country in the CIS where two “Boeing-787 Dreamliner” aircraft have been delivered. Modern airliners were also acquired in the previous periods. New routes are being opened. Air transport is important for every country. Thanks to both cargo and passenger transportation, Azerbaijan has become a regional hub in this area. We must further enhance our role in this. Our geographical location should be underpinned by a powerful transport infrastructure. The construction of the commercial seaport and the construction of the Baku-Tbilisi-Kars railway are projects closely related to each other. We must expand these corridors. The North-South and East-West corridors pass through Azerbaijan. The transport infrastructure emerging in Azerbaijan will serve both our country and our neighbors.

Work is under way in respect of the Caspian Shipping Company. Reforms are carried out and new ships purchased. Most importantly, the shipyard in Azerbaijan already produces ships. Orders have been placed for oil and gas operations. Ships will be built for military purposes. At the same time, all other vessels such as tankers and cargo ships will be produced in Baku. This is also a result of our industrialization policy. The decision to build the shipyard has already paid off. We could see that all the ships – tankers, cargo ships, supply vessels – were purchased abroad. But we have internal needs. We need to expand our fleet. At the same time, we are implementing and will continue to implement major oil and gas operations. Due to the "Shah Deniz" field there is a need for new ships. Therefore, the construction of a shipyard in such a short time has been an important step. This plant can provide services to all littoral states. During conversations with my colleagues at the Caspian summit, I said: Such a plant is already available, and you can also use it and place orders. Generally, we can work even more closely in this direction in the Caspian Sea basin. If, for example, Baku has such a modern plant, I do not believe that the construction of such a plant may be required elsewhere. So there should be proper cooperation here. And Azerbaijan is speaking its word.

Last year, we laid the foundation for the Southern Gas Corridor. This is a historic event. This project will further accelerate our long-term development. This project is equivalent to the "Contract of the Century". This project is now known as "Project of the 21st century". It is quite symbolic that on 20 September 2014 – exactly 20 years after the signing of the "Contract of the Century" – the foundation for the Southern Gas Corridor was laid. The successful implementation of the oil strategy of great leader Heydar Aliyev is being provided today. See how much work has been done since the signing of the "Contract of the Century"! Baku-Tbilisi-Ceyhan, Baku-Tbilisi-Erzurum, the Southern Gas Corridor, the development of the Shah Deniz field. Azerbaijan has reasserted its leading role here. The author of the Southern Gas Corridor is Azerbaijan. The driving force behind this project is also Azerbaijan. This should be known to all. If it hadn’t been for the strong will of Azerbaijan, this project would never have been realized. We have done very hard work in connection with the implementation of this project. We worked very hard and have already begun to implement this project. We have secured that on the most favorable terms for Azerbaijan and within the framework of international cooperation because it is impossible to implement this project without our partners. Therefore, this project requires even greater coordination because it involves a lot of countries and companies. The Baku-Tbilisi-Ceyhan project involved three countries – Azerbaijan, Georgia and Turkey. The implementation of the Southern Gas Corridor will involve about 10 countries. We view this project as being very large and wide, and, of course, we divide it into stages. First of all, the expansion of the Baku-Tbilisi-Erzurum gas pipeline, the TANAP and TAP projects and, at a later stage, other projects. Therefore, it is a historic event. Azerbaijan has shown leadership in this area too.

Political and economic interests of our country will be secured. Azerbaijan is becoming an indispensable country for European consumers. What does this mean? There is no need for a long explanation. We are playing a role in the energy security of Europe. This role will gradually increase, as Azerbaijan is the only new source of gas for Europe. All other sources are already there. The reserves of these sources can be transported to Europe via different, i.e. new routes. Such projects are available, but there is only one new source – the Caspian basin and Azerbaijan. We have assumed this responsibility. I am confident that we will successfully implement this project because there has not been a single project that we have started but not managed to implement. This includes Baku-Tbilisi-Ceyhan, Baku-Tbilisi-Erzurum and Baku-Tbilisi-Kars, i.e. international projects. I am sure that the Southern Gas Corridor will also be fully implemented.

Baku will host the first European Games. The Games are five months away. The organizing committee works hard and meets all the objectives. All state agencies take an active part in this. Currently, preparations are in the final stages. We intend to hold the European Games at the level of Summer Olympic Games. These games should become a European holiday. Azerbaijan is again demonstrating its leadership because the standards of European Games will be established in Baku. Such games have never been conducted before. These games could be conducted at a different level but we want to turn this major sporting event into a grand celebration of friendship. It is very necessary.

The role of Azerbaijan is gradually increasing. The public and political situation in our country, the multiculturalism, the religious and ethnic tolerance and our openness to the world – all of these factors are important to Europe and the world today. In real life, we, unfortunately, often see a completely different picture – bloody conflicts, terrorism, hatred, double standards and so forth.

Azerbaijan offers its own model of development. This model is open to all. The economic model – we talked about it today. So it is a unique model of economic development. A model of political reforms. I think that Azerbaijan can serve as an example because by conducting economic reforms we also attach great importance to political reforms. We have created all democratic institutions and provided all freedoms – the freedom of speech, the freedom of assembly, the freedom of conscience, the freedom of the press, the freedom of the Internet, the freedom of religion. These freedoms are not only provided, they are also a way of life, a public policy. Therefore, the European Games are not just a sporting event. I believe that the athletes and visitors who will participate in this event will, of course, get acquainted with Azerbaijan and see the model of successful development of Azerbaijan.

If all countries dealt with their own affairs, did not interfere in the internal affairs of other countries and did not put forward unreasonable demands, the world would be more stable and security would be provided. We in Azerbaijan are doing and will continue to do this work, and I am sure that we will successfully complete 2015. Thank you.