President Ilham Aliyev has chaired a Cabinet of Ministers meeting dedicated to the results of socioeconomic development in nine months of 2011.
The head of state made opening remarks at the meeting.
Opening remarks by President Ilham Aliyev
- At this meeting of the Cabinet of Ministers we will discuss the results of socioeconomic development in nine months of the year and talk about the work to be done by the end of the year.
With two months left until the end of the year, we can say that 2011 has also been successful. Over the course of this year we have resolved key social and economic issues facing the country and successfully implemented all our programs.
As regards statistics, we can say that dynamic development has continued although the gross domestic product did not grow as rapidly. There are reasons for that. It is gratifying that thanks to the work we carried out in previous years and the right policies, we have succeeded in diversifying our economic development.
Although the gross domestic product has only grown by 0.5 per cent, our non-oil economy developed by 8.2 per cent. I repeat that this growth is the result of work we did earlier. With regard to the fact that the gross domestic product grew only by 0.5 per cent, this is explained by reduced oil production this year. As a result, this drop has prevented the overall indicator from being high. But there is no such goal. Our economy, the structure of our economy has significantly changed for the better. Thanks to the work done in previous years and to be done in the coming years, our economy will reveal itself as a fully diversified economy.
So the projects launched earlier and under way now have made a truly immense contribution to the Azerbaijani economy.
As for the development of industrial production, the overall indicator is negative because of the reduced oil production. But the non-oil sector of the economy has achieved a growth of 9.2 per cent. This growth was achieved thanks to the investment made in the real sector of the economy and the development of entrepreneurship. This is the result of loans, programs on the development of entrepreneurship and a highly successful public policy.
Thus, the task we set a few years ago to create a powerful industrial potential in the country is being successfully fulfilled. Large enterprises are being set up, major industrial parks are beginning to operate. At the same time, the activities of small and medium-sized enterprises are expanding, their number is increasing, and I repeat that the reason for this growth is that the state provides great support for the private sector, allocates loans. Another reason for this growth is the fact that specific measures are taken to transform state-owned companies into international ones. Our state companies have now turned into strong entities in terms of professionalism, logistics and technical equipment.
Agriculture has also experienced growth over the nine months. This is a very positive development, because we are taking specific measures and implementing programs to develop agriculture. In particular, even larger programs will be realized next year. As you know, the government allocates significant resources for the development of this sector, provides benefits. The delivery of equipment, provision of low-interest loans and subsidies – all this serves agricultural development. It is no coincidence that agriculture grew by 7.6 per cent in nine months of this year. This sector also plays a great social role because about half of our population lives in rural areas. Thus, agricultural development leads to increased yields and bigger areas under crop. As a result of land reclamation, we will introduce even more land into circulation in the coming years. From now on the measures relating to agriculture will be carried out consistently. Along with this, we have to think very seriously and work hard on accessing new markets. This work is under way, especially when we consider that non-traditional markets are waiting for our agricultural products, for the products of our processing industry. We simply need to carry out our policies properly, harmonize domestic production with domestic consumption and access foreign markets, so that agricultural goods to be produced in Azerbaijan in even greater volumes in the future could make it to the buyer.
I can say that in nine months of this year our financial standing has significantly improved. Although we are implementing major infrastructure projects, our foreign exchange reserves are not reducing. In fact they are growing. In nine months our reserves have increased by about $11 billion. At present, Azerbaijan's foreign exchange reserves exceed $40 billion. This is a very high indicator. If we look at developed countries, we can see that Azerbaijan is not inferior to anyone in this regard, we are ahead of many countries. If we consider that we have a prudent oil and gas policy and strategy, that we always coordinate investment with expected revenue, there is no doubt that we will further increase our exchange reserves in the coming years without reducing investment and social spending. This is a great asset. It gives us economic power, enables us to implement investment projects, protects and will protect us from difficulties and crises. The main contributor to the accumulation of foreign reserves in such volumes is the establishment of the State Oil Fund of Azerbaijan in 1999 and its transparent operation.
All our revenue is stored and managed transparently and reliably. At this stage they are channeled into projects associated with the development of our country. At the next stage, starting from next year, in order to diversify our financial resources, we will use these funds as investment in various projects in different countries.
In short, our country is successfully handling economic development issues. Not surprisingly, international financial institutions appreciate the reforms ongoing in the economic and social spheres in Azerbaijan and raise our credit ratings. While credit ratings of developed countries are falling in the crisis years, the credit rating of Azerbaijan is rising. One of the world’s most influential organizations, the World Economic Forum, has released a regular report on the competitiveness of world economies. Praising the activities of Azerbaijan, it has placed us in 55th place. In terms of economic competitiveness, Azerbaijan is a CIS leader. We are in the leading position and I am sure that we will hold the lead. Because our successes are based on thought-out reforms, prudent and independent policies. The energy factor no longer plays a major role in our successes. As you know, we have done a lot in recent years to reduce our reliance on the energy factor even though the oil and gas potential still secures our political and economic interests today and will continue to do so in the future.
In 2011, very memorable events have occurred in the social sphere. These events, these steps also show that our policy is socially oriented. We are and will be committed to the principles of a market economy. But at the same time we are taking specific steps to protect the vulnerable population more effectively from a social standpoint. These steps are not limited to the adoption of programs, statements, these programs are quite specific.
This year, the pensions of about 900,000 people were raised by an average of 40 per cent. In general, pensions in Azerbaijan have been increased by 35 per cent in the first nine months. This is a very high figure, a great achievement, a very serious step, a timely, correct and fair step aimed at creating better material conditions for the older generation.
At the same time, the average salary has been increased. Currently, the average pension in Azerbaijan is $190 and the average salary is $450. It is a good indicator, but it should be even higher. We will strive to take further measures to address social issues in the coming years, so that pensions and salaries continue to grow, the living standards of our people improve and such a social evil as poverty is eliminated in Azerbaijan. For the most socially vulnerable population the government has developed a program of targeted assistance. Currently, the program covers 113,000 families. Over 500,000 people receive monthly assistance from the state. On average, each family receives aid in the amount of 102 manats, or about $130.
This is also a very correct step. It is a fair step. As long as these people live in poverty, the Azerbaijani government will assist them. When they break free from the grips of poverty and improve their financial situation, this assistance will certainly be suspended. Because the main issue is the principle of social justice. We have been living in a market economy for 20 years, our economy is regulated by these principles. The market regulates both demand and supply. But there are cases when people have no opportunities, when they have no job and financial security. We must not remain indifferent to their plight. The main objective of the program of social assistance is to improve the financial situation of the poor. With regard to the unemployment I can say that Azerbaijan has done a lot in this field. The rate of unemployment is about 5.5 per cent. If we look around, at developed countries, we can see that it is also a very good indicator. In some developed countries unemployment is at 20, 15 and 10 per cent, while in Azerbaijan it is 5.5 per cent. This may not reflect the real situation, as we know very well that, unfortunately, we do not employ a detailed and precise procedure in this area. There are cases when no registration is carried out. In some cases people are paid not officially, but in envelopes.
We have repeatedly raised this issue. I can say that we have taken effective measures in recent years to normalize the situation in this area, and these measures should be continued. If we take into account this factor, we will see that the rate of unemployment in Azerbaijan is below 5.5 percent. It is likely that the level of poverty is also not 9.1 per cent, but lower. But, of course, as a result of specific administrative steps and institutional measures in the coming years, we will have a completely real picture of the economic situation. The innovations currently applied, the principles of “electronic government” and other progressive initiatives will provide the public with a picture that will reflect the real situation by 100 per cent.
This year, as always, we have implemented successful investment projects in our districts, additional measures have been taken to create new jobs. In nine months of this year, a total of 74,000 new jobs were created, including 50,000 permanent ones. Thus, about 950,000 jobs were created in Azerbaijan over the past eight years.
The program on the development of districts is successfully under way. This program is occasionally supplemented and amended. Sufficient funds have been allocated to districts from the Reserve Fund of the President this year. These funds largely focused on socioeconomic and infrastructure projects. In particular, we have been seriously engaged in repair and construction of rural roads lately. Major programs are being implemented. This area should be given even more attention in the coming years. In short, the program on the development of districts is ongoing, there is no reason for concern.
This year we have passed a very broad and specific program on the development of villages and settlements around Baku. I can say that the program was launched in the shortest possible time. We are already seeing the initial results of this program. Earlier, in 2005, we passed a three-year program on the development of suburban settlements of Baku, which has been completed. A new program was required. We did that, and we can say that large-scale creative, rehabilitation and landscaping work is under way in all suburban settlements. The entire infrastructure is updated, new gas, water and sewer lines are laid, electricity supply is improving, schools, hospitals, medical facilities and clinics are built. So there are specific proposals on each settlement, and they are reflected in the program.
This program has been published. When developing this program, we, of course, received the main information from the ground, i.e. residents of settlements submitted their proposals which were subsequently summed up and the program eventually adopted. It also contains specific proposals on employment opportunities for residents of suburban settlements. The allocation of loans to settlements has also begun, and there are already specific programs and proposals on some areas. I am pleased that the program on the development of Baku and suburban settlements is well under way. It suggests that all the social and economic issues existing in suburban settlements will be resolved within two to three years.
Throughout the nine months of this year, we have systematically built our work in all directions. This is already a wonderful tradition. There are specific programs on each sphere. We have a total of 50 targeted programs in Azerbaijan, financial sources, their procedures and deadlines are specified. Everything we do is of specific nature, and this is the guarantee of our success.
Unfortunately, there is no progress in our most difficult problem, the Armenian-Azerbaijani conflict over Nagorno-Karabakh. I have provided the public with sufficient information on this issue. I also spoke extensively on the issue at the ceremony marking the 20th anniversary of our independence, so possibly there is no need for repetition. I simply want to say that Azerbaijan has a principled position which is based on historical truth and international law. We will not back down from this position. Azerbaijan’s territorial integrity is not, has never been and never will be the subject of negotiations. We will try to restore our territorial integrity using all our opportunities. Let me repeat: although there are no results, the views expressed by international mediators in recent months, in particular regarding the unacceptability of the status quo, give us a glimmer of hope. So the status quo is unacceptable and should be changed, the conflict is not “frozen” and the change of the status quo clearly requires withdrawal of occupying forces from our occupied lands. This is where a solution should be sought. Occupying forces must withdraw from our lands. International law should serve as the basis for resolving any issues, especially those related to conflicts. We will do everything in our power to resolve this issue in our favor soon and in a fair manner, i.e. in line with international law. At the same time, the figures I have cited today, the economic development, economic potential, demographics and, of course, the military potential, play and will continue to play a role in a fair and speedy settlement.
We have also taken extensive measures in this direction, we are pursuing a precise policy. Economic indicators of the current and previous years, our military capabilities suggest that the gap between Armenia and Azerbaijan is increasing. These two countries are incomparable, the difference between us is like between heaven and earth. Everyone knows this – the international community, the sides and organizations dealing with the matter. Most likely, this reality has been the basis for recent statements about the status quo, i.e. changing the status quo. It is clear to us and any impartial observer that Azerbaijan is growing stronger, while Armenia is weakening, the population of Azerbaijan is increasing, while the population of Armenia is decreasing.
As for military issues, economic statistics clearly shows who is who. As the saying goes, suffice it to have an unbiased look of our cities to see what a great road Azerbaijan has covered and that our country is strengthening day by day. As for the military balance, I can say that until recently, probably as a result of Armenian propaganda, the difference in this area, i.e. the difference in our favor, was not fully realized by international organizations and observers. However, the parades recently conducted in both Azerbaijan and Armenia have demonstrated who is who. I think it was a big mistake to conduct a military parade in Armenia. Prior to that, as always, they had been trying through various myths or fantasies to convince others that the Armenian army is the most combatant of all, but their so-called “military parade” revealed the deplorable plight of the Armenian army. You, all the people, including myself, could see for the first time that their military hardware cannot move itself. During the parade it was towed by trucks. This may have several reasons. Either this hardware does not work, is in disrepair, or there is no fuel. Or both. Most likely, both factors have played a role. This parade has shown again that Armenia is not an independent state, it is an outpost. Earlier such statements were made by senior officials, but what we saw at the parade confirms that Armenia still is an outpost.
In addition, the event carried out in Armenia will probably be remembered by yet another novelty. To put it mildly, the participation of religious leaders is a little surprising, not to mention the fact that priests were marching like soldiers. It is hard to describe this in words. We appreciate that due to its aggressive policies Armenia is facing a demographic catastrophe, but we had no idea that the clergy are called up for military service.
This is both ridiculous and tragic. I think that they should soon realize that the settlement of the Armenian-Azerbaijani conflict over Nagorno-Karabakh is in their own interests.
Finally, the possibilities of our country and its growing international authority are exemplified by the recent UN vote.
As you know, Azerbaijan has applied for admission to the UN Security Council. To achieve this goal, our diplomats have done a great job in recent months. The vote has been quite interesting. The people of Azerbaijan may not know this. I can say that Armenia had also nominated itself at the preliminary stage. But several months ago they probably thought and realized that they cannot compete with Azerbaijan on the diplomatic arena and withdrew their candidacy very quietly. This in itself shows that they are helpless in the face of Azerbaijan and acknowledge that. They know that their expansionist policies against Azerbaijan, their aggressive policy, dirty dealings and evil plans can never be supported by the international community. On the contrary, the international community condemns and will condemn them. As a result, Armenia withdrew its candidacy very quietly, so that this disgrace is not discovered by many people and countries.
I do hope that they demonstrate the same approach to the settlement of the Armenian-Azerbaijani conflict over Nagorno-Karabakh, will think again, weigh all the pros and cons, and finally realize that they cannot and will never be able to compete with Azerbaijan in any field. The sooner they realize this, the better for them. It is not ruled out that their political and diplomatic failures, their failure in the UN Security Council vote will not be limited to the diplomatic arena. Azerbaijan is a strong state, and neighbors of strong states usually want to be friends with them.
As for the vote, it is still under way. Several rounds have already been held. In the first round, Azerbaijan was first. In the second and subsequent rounds Azerbaijan was also ahead by a wide margin. Next rounds are due today, on 24 October, but we can already say that it is our great victory. Regardless of the final outcome, I can emphatically say and I am absolutely convinced that this is a historic result. A total of 113 countries support Azerbaijan. This is a historic achievement. This is a sign of the international community’s attitude towards Azerbaijan, it is evidence of our country's development. I have repeatedly said in my speeches that Azerbaijan is a reliable partner. This sentence carries a great meaning. Maybe those hearing it now cannot fully comprehend how much sense this statement contains. Being a reliable partner is enormous responsibility and a great achievement. We are trusted partners indeed. Someone may like our policy, others not. We are not trying to please everyone. We conduct our own policy. Azerbaijan is a reliable partner. There is no discrepancy between our words and deeds. There is no discrepancy between our words and signature. To earn trust is not easy, especially for a young independent state. We have recently celebrated the 20th anniversary of our independence, spoken about great successes and future plans. I can say that the support of 113 countries is a logical outcome of these 20 years.
In short, let me repeat that we have specific programs, plans, policies related to the situation in the country, the reforms ongoing in the country and our foreign policy. This policy enables our country to develop rapidly and successfully.
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Then, Minister of Finance Samir Sharifov, Minister of Agriculture Ismat Abbasov and Minister of Transport Ziya Mammadov spoke about the activities associated with the socioeconomic development in nine months of this year.
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Closing remarks by President Ilham Aliyev
- All the envisaged programs must be completed before the end of the year. The first nine months of the year show that there is no problem with the execution of the programs. All programs are implemented successfully. Information is regularly provided on the work done in every sphere, it is analyzed and additional instructions are issued. So I am sure that all the issues on our agenda will be fulfilled before the end of this year, and we must already think about the work to be done in 2012.
I am sure the macroeconomic situation will remain stable for the rest of the year because inflation in nine months of the year has only been 8.4 per cent. So we have a single-digit rate of inflation. We had set the task at the beginning of the year to contain inflation to single digits. I believe inflation will remain at a single-digit level for the rest of the year.
Considering that monetary incomes of the population have increased by 19 per cent this year, we can see that they exceed the inflation more than twice. And this picture has been observed for several years. Incomes exceed inflation twice and perhaps even more times every year. By and large, the 19-per-cent increase of population incomes over a year is an excellent indicator in itself. Next year’s state budget will soon be discussed in the Milli Majlis. As ever, the budget will be both investment- and socially-oriented. The implementation of specific social programs must be taken into consideration.
Our budget expenditure increases every year. Next year’s budget spend should be around $22 billion, while the consolidated budget will be $25 billion. This is a very high figure, a great amount. If we calculate budget expenditure per capita, we can see that Azerbaijan is among world leaders for this indicator. In the coming months, especially in 2012-2013, we must try to implement the country’s key infrastructure projects. There are many such projects. Only a few of them were mentioned at this meeting. There are major, gigantic infrastructure projects in all spheres. I am regularly updated on their implementation and review progress on the ground. Major land reclamation projects are under way. The Shamkirchay water reservoir and a power station are under construction. I have recently reviewed progress in the construction of the Takhtakorpu water reservoir, canals are being built. This is a rare infrastructure project that will serve Azerbaijan’s development, in particular agricultural development, for decades to come. Specific work is already carried out to introduce more land into circulation and we must pay special attention to irrigation issues. Specific programs are being implemented.
The work to be done in the power engineering sector in the next two years will facilitate the realization of almost all our plans in this direction. Very serious measures have been taken in this sphere in recent years. Eleven new power stations have been built. In the last five years alone Azerbaijan has built and reconstructed power stations with a total of capacity of 1,500 megawatts. Our generating capacity is 6,500 megawatts now, which fully meets the current demand and the demand for several years ahead. Besides, we export electricity to neighboring countries. We intend to increase electricity exports. To do that, we are building new high-voltage power lines. I am sure that this project will be completed next year. So along with oil and gas, Azerbaijan will export electricity. There are exports now, we export electricity to almost all neighboring countries. We should try to increase this volume.
A very significant and remarkable step was taken in this sphere this year. We have started the construction of the Northern-2 power station. It will have a capacity of 409 megawatts. I do hope that it will be built and commissioned in the next two years. The construction of the Southern power station is well under way. I also hope we will open this large station next year. It is expected to generate 780 megawatts of electricity. So by the end of 2013 we will obtain around 1,300 megawatts of electricity, perhaps even more. Attention should be paid to this issue in the years ahead even though the stations under construction will enable us to ensure our energy security for the next five to 10 years. But we should look at the overall development of our country. This is what we are working on. We know that Azerbaijan’s economic and industrial potential will substantially increase in 10 years, and energy capacities should always be ahead of our development.
At the same time, specific steps are being taken to create alternative energy generating capacity. A first pilot project has been implemented. A combined-cycle station has been commissioned in Gobustan and I attended its opening. I think this wonderful experience should be broadly used in Azerbaijan. I am very pleased that Azerbaijan is already producing solar panels. Several specialized enterprises will start operating soon.
We are generally paying great attention to renewable energy. Solar and wind energy is new to us. We are treating this issue very seriously and results are already discernible. In parallel, specific programs are being implemented in the area of hydro energy. We have laid foundations for several power stations on small rivers this year. Each of them has a capacity of 1-2, maybe 3-4 megawatts, while the construction of 20-25-megawatt stations is scheduled for next year. Next year we must open the Fizuli power station. It is expected to generate 25 megawatts of electricity. Power stations of about the same capacity are to be built on the Takhtakorpu and Shamkirchay water reservoirs. So we are implementing this program too. As mentioned in earlier meetings, a map of all water resources has been developed and power stations are to be built on all water sources.
Industrial development programs are being executed. I mentioned in my opening remarks that our non-oil sector has grown by 9.2 per cent. This is an excellent indicator. I hope it will increase further next year. A new aluminum plant that will further reinforce the country’s industrial potential will start operating soon. In previous years we took specific and serious steps to develop the aluminum industry. We issued loans, a large substation was built in Ganja to feed this new facility. Specific measures are taken to develop metallurgy and a major metallurgic facility may start operating in the near future. This will both create numerous new jobs and expand our export potential. So in the coming years, over the course of 10-15 years, we must ensure that our non-oil economy meets our goal. And our goal is to increase gross domestic product per capital to the level of developed countries. The work being done to this end is yielding fruit. At present, GDP per capita in Azerbaijan is around $6,000. Compared to earlier periods, this means great progress. It is one of the best indicators in the CIS. But we must try to at least double this figure in the years ahead even though the GDP in Azerbaijan has tripled in the last eight years. In other words, this is probably unseen elsewhere in the world – a growth of 300 per cent. We have the goal of at least doubling the GDP in the next decade. We must do this by developing the non-oil sector. Because we are satisfied with current oil production. As I mentioned in my opening remarks, the slight decrease of industrial output is the result of reduced oil production. We are not worried about that. In fact, I think the current level of oil production in Azerbaijan is the best. We shouldn’t hike it because there is no need for that.
As I mentioned, our exchange reserves have increased by $11 billion over the year. Not a single social and infrastructure project is delayed. All projects are ongoing, the budget is growing. Additional production of oil will simply increase our exchange reserves sharply. I think this is unnecessary. We are interested in our oil serving the people of Azerbaijan a long time, we want oil production in Azerbaijan to be stable for decades. As for gas production, we must, of course, dramatically increase gas production by investing in this sector in the coming years.
So things on the industrial front are going well, industrialization is ongoing. The goal here is both to establish large enterprises and, perhaps even more importantly, set up small and medium-sized businesses. The launch of the aluminum plant and the overhaul of the country’s petrochemical sector should bring to life hundreds, perhaps even thousands of small and medium-sized enterprises. They will be manufacturing finished products. Appropriate instructions have been given in this regard. The Ministry of Economic Development is working hard on this issue, there are good proposals. There are both conceptual proposals and specific loan procedures on the development of small and medium-sized businesses.
It has been indicated that there are great successes in agriculture. Production is growing and will continue to grow. We are taking specific steps to ensure food security. It is possible to say that we have largely achieved food security. Further successes will be made as production continues to grow in the future.
The construction of a new fertilizer plant is expected in Azerbaijan. This is another novelty. It is also our initiative – why should we buy fertilizer abroad?! We have major plans on agricultural development and will continue to provide subsidies. The fertilizer imported now is given to farmers on beneficial terms. We buy it abroad and pay for it. The new fertilizer plant to be set up in Azerbaijan will fully meet our needs and strengthen our export potential. This is another novelty for us.
The process of acquisition of machinery and pedigree cattle will be continued. The minister of agriculture has spoken both about the work done and about future plans.
There are good results in the development of domestic production. The exhibition on the 20th anniversary of our independence displayed the goods produced in Azerbaijan in recent years. A truly broad assortment of agricultural and industrial products is produced in Azerbaijan. Almost all agricultural processing enterprises produce quality goods – from automobiles to trucks. Considering the great demand for our products, we must and we do access new markets. Because the goods made in and exported from Azerbaijan have already occupied a certain market niche for their quality. Our quality agricultural products exported in line with all international standards are already in demand.
We must increase our exports to existing markets. As I mentioned earlier, following the introduction of new land into circulation our agricultural production will considerably increase. If we add land reclamation activities, the irrigated area and, therefore, production will also grow. So additional loans must be provided for people to open new processing enterprises. There were cases this season when the produce harvested by farmers was left unclaimed due to insufficient processing capacities. And this was because they did not expect production to grow so much. And production is growing, which is great. So we must allocate loans for new processing enterprises to emerge, so that all agricultural produce is processed and exported.
So we must pay great attention to this area. This will also contribute a lot to private enterprise development. There is an interest and specific proposals on accessing new markets. This issue was also discussed during my recent official visit to Kazakhstan. The produce of Azerbaijani processing enterprises may be consumed there. We may discover new markets on the other side of the Caspian. This meets both our and Kazakhstan’s interests. This issue was considered by the joint economic commission. Since this sector is fully in private hands in Azerbaijan, we can’t force farmers or business people to sell their merchandise to a certain country. But we must create conditions for them to be able to access new markets. Because, I repeat, production will grow. We invest a lot in increasing production and are sure it will increase in several years. Our fruits and vegetables are of good quality and their volume is growing. So I think we will hear specific proposals on accessing new markets next year.
Our policy regarding entrepreneurship has justified itself. It stems from the creation of around 900,000 jobs, financial assistance and political support for entrepreneurs. So I think the situation has already stabilized, the volume of loans is growing. As you know, the loans are now issued using the funds issued and repaid earlier. And this is a great result. I said a few years ago that there will come a time when we will provide loans using the repaid funds, and this time has come. In the coming years we need to think about new projects. As you know, we have recently raised the upper limit of the loans so that they could benefit large companies.
Another issue regarding entrepreneurship is that we are accessing foreign markets with our investment. We must do that and expand the investment geography. Now we invest in neighboring countries – Turkey, Georgia, Ukraine. Our investment is now expected in Balkan states. A delegation has been sent to Balkan countries to explore investment opportunities. There are specific proposals. The private sector will start investment projects and the state is considering this issue now.
We are examining investment opportunities in European Union countries, and there are already initial steps. To diversify our financial resources, we must invest a portion of our exchange reserves in real estate. The existence of such opportunities in the world is being examined, first steps have already been taken.
Even more such investment must be made in 2012. Investment can be made in North Caucasus republics of Russia. Especially if we consider that leaders of North Caucasus republics recently visited Azerbaijan and both sides are interested in seeing Azerbaijan invest in them. With this aim, the economic development minister will soon travel there with a large delegation to explore opportunities. We view this issue very positively. It is important to the development of bilateral relations between Russia and Azerbaijan and is a novelty for our ties. This meets our economic interests and, of course, will contribute to the economic development of the South Caucasus.
Very serious steps and measures have been taken this year to fight corruption and bribery. This issue is always in the focus. Even more attention should be paid to this issue due to the country’s economic development because economic and state costs are rising. We must ensure complete transparency. Our system, the financial system must be transparent. Our system on infrastructure projects must be transparent. We must make the fight against corruption and bribery even more effective. I can say that we have achieved great results this year. There is great progress. But we shouldn’t be complacent with this progress, this issue must always be in focus. I said early this year that it is not a campaign, it is our conscious choice. All bodies should always revise their activities in this regard. Our policies should address several directions. Of course, administrative measures must be and are taken. Punishments must be and are applied. Unfortunately, without the punishment our fight will not be effective enough. At the same time, institutional measures should be taken. Systematic measures must be and are taken. One of the goals of the transition to electronic governance is to step up the fight against corruption and bribery. Comprehensive measures will continue to be taken. I repeat that we must use all the instruments here.
There are specific proposals on creating the electronic government. In general, the ICT sector is developing successfully in Azerbaijan. International financial institutions point to our successes in this area. Broad-band Internet is widely used in Azerbaijan. The number of Internet users exceeds 50 per cent. This is very gratifying – the more, the better. Other ICT-related matters must be resolved too. Our artificial satellite will be put into orbit next year. This will only be a first step. It should be followed by the second and possibly even third satellite. So there is progress in this sphere and it serves the country’s modernization. It is no secret that future progress in the world will largely be associated with the ICT sector. We must both apply cutting-edge technologies and train qualified professionals.
Things are also good in the oil and gas sector, which forms the basis of the national economy. All programs are ongoing, large-scale gasification is under way. By the end of 2013, the level of gasification in Azerbaijan must reach 95 per cent, this is the goal. I am sure we will achieve it. Every week and month some new settlements receive gas supply. And this is very gratifying.
There are concrete proposals on creating a new petrochemical complex in Azerbaijan. The government has considered them. This is very important to our long-term development. The oil refineries currently in operation were built in earlier periods. True, they have been upgraded and modernized, but we must establish a new petrochemical complex in line with latest technologies.
A remarkable event occurred in Azerbaijan last quarter, as major reserves of gas were discovered on the Absheron field. A further 300-350 billion cubic meters of gas have been revealed. In late last year, the State Oil Company discovered the Umid field. So our proven reserves constitute 2.6 trillion cubic meters. This is a very high figure worldwide. Considering our geographical location I can say that this will open up great opportunities not only for us, but also for our partners, for Europe.
As you know, some European countries are reversing the operation of nuclear power plants. In particular, major producers of electricity are pursuing this policy. This means that the demand for gas will increase in the future. We already know the dynamics, the demand. We know that current supplies will be insufficient in five to 10 years. Considering that some big European states have banned the construction of nuclear power stations, the only energy capable of replacing it is gas. We must align our work with general criteria. We must consider that our vast gas reserves must be taken to world markets – and they are in various ways. We have four pipelines, all four are in operable condition, we export gas in four directions. There is a capacity to increase exports in all directions, and we will tackle these issues.
Very important events have occurred in 2011 in the construction of schools in Baku and suburban settlements as part of the measures to create a social infrastructure. In Baku alone, 54 schools have been renovated over three months. I have personally visited most of them, asked teachers and principals, checked myself and saw that the schools renovated in Baku over this period are at the highest level. We must ensure the same level everywhere – in Baku and districts. We must finish the construction and reconstruction of schools next year and afterwards.
As you know, this year has been announced the Year of Tourism in Azerbaijan. This sector is developing even faster and the number of tourists visiting Azerbaijan is growing. This is great.
I think Azerbaijan and Baku are now known in the world as a rapidly developing country and city. The availability of high-level infrastructure enables us to explore more advanced tourism opportunities, which we do. It is no coincidence that more five-star hotels are and will be built in Baku and in the districts this year and possibly next year. For the number of five-star hotels we will be a regional leader. Six five-star hotels will be commissioned in Baku alone this year and next year. Two of them have already been commissioned.
Five-star hotels are also built at the mountain skiing resort and in other districts. So I think we can become a high-level tourism destination on the world map. This, however, does not mean that lower-level hotels should not be built. They should be and are built.
But considering our geographical location, the beauty of the city and our natural setting, I want Baku and Azerbaijan to become elite travel destinations. I have given my recommendations to the Ministry of Culture and Tourism. Of course, it will be regulated by the market, the private sector. But the construction of six five-star hotels in Baku over the course of one to two years shows that investors and renowned brands see Baku as an elite travel center. This is gratifying. I think we have started to secure ourselves a worthy place on the global scale. Suffice it to list the names of the hotels to be opened in Baku this year and next year to see that Baku and Azerbaijan are turning into elite travel centers. Kempinski and Hilton hotels have opened in Baku alone this year, while Marriot, Four Seasons, Freemont and Jumeirah hotels will be opened the coming months. This is a rare indicator in itself. I have not heard of anyone else in this region opening six five-star hotels in one city over the course of one year.
At the same time, modern hotels are under construction in our districts. I stay abreast of the situation. Two top-level hotels were built in Naftalan this year, hotels are built in Gabala. When I recently visited Guba, I saw a five-star hotel under construction there. In Shamakhi, Lankaran, other districts – in other words, everywhere. We are happy to live in a beautiful country. We live in a country with rich nature, with all climate zones, we have all the natural conditions. I am very pleased that we have been effectively using these natural conditions in recent years.
Several orders have been and will be issued on the development of our historical cities. In general, we have specific proposals, plans and programs to develop every district. At the same time, every district receives budget funds for landscaping work. When I travel to districts I allocate funds from the Reserve Fund of the President for districts to carry out landscaping. Because we are implementing key infrastructure projects in a centralized manner. Gasification, sewage, drinking water, electricity – this work is done by central bodies from the state budget, while local executive authorities deal with road construction, landscaping of towns and districts. Funds are allocated for that. Besides, I have recently signed orders on high-level landscaping of Azerbaijan’s historical cities. Shaki and Shamakhi have received 5 million manats each for landscaping. These are initial payments, there will be more. More funds will be allocated and special orders signed on the development of other historical cities in the future. All districts and villages are equally dear to me. But there are cities in Azerbaijan which were mentioned on ancient maps. Of course, we should pay special attention to these cities and the historical sites located in them. So this process is ongoing and will be continued. I think this is a fair approach. We must restore our historical cities in a way that would preserve their ancient identity and modernize and make them more beautiful.
I have already said that infrastructure projects such as water, sewage, gasification and rural roads are ongoing. I am sure funds will be envisaged in the state budget in the coming years. Of course, landscaping and reconstruction are ongoing in the capital Baku. The transport minister has mentioned how many transport infrastructure projects are under way in Baku. This is a truly unbelievable achievement. Roads, junctions, tunnels, crossovers are built everywhere, roads are expanded. The Intelligent Transport Management Center is being set up. I visited the center during construction, it is perhaps the first such center in the world. I have been to other countries. It uses the latest technologies. The city population may not know yet what the center will do, but when the center is launched I am sure every citizen, every resident of Baku will see how much comfort and convenience the center will give all of us.
Regarding the development of Baku I can say that any impartial and objective visitor of our capital is fascinated with our city. Baku has become so beautiful that it is impossible not to fall in love with it. We are very proud and pleased with that. Baku is preserving its uniqueness. There is no other city like Baku. It is a place where history, culture, modernity, infrastructure, taste and style harmoniously blend. Therefore we must treat this beautiful and native city with great care. No steps should be taken that would not reflect our historical past or modern trends, nothing tasteless should be done. I have spent some of my time on the development of Baku and I enjoy that. So I demand that all civil servants dealing with the development of Baku treat this issue with utmost care and attention.
New infrastructure must be and is created. This must be done in a quality and beautiful manner. Historical buildings are restored, their appearance should not be changed. Tasteless initiatives should not pass. Whenever I see such things, I immediately stop them. But I can’t walk and exercise control over this every day. The Mayor’s Office of Baku is doing a good job. We must ensure that Baku always fascinates visitors both as an ancient and young city. Infrastructure and landscaping work will be continued. There are so many projects in Baku that it would take hours just to enumerate them. I want to express my views regarding one project, the Flag Square. The Flag Square was opened last year. Our national flag was hoisted. It has been a little more than a year. There is extensive construction under way at the Flag Square. Baku residents may observe this from the distance. The reason is that when the Flag Square is ready, we will open it to our people. A new boulevard that will link the Flag Square with the seaside boulevard is now under construction. This is a rare project. So while the current length of our boulevard is 4 km, when the Flag Square and the area in between are opened, it will be a 7-km promenade. But we will extend this area further afterwards. So we have great plans on how to make our city even more beautiful. This will give us the opportunity to introduce the symbols of our national statehood in a more beautiful fashion. This will create wonderful conditions for our city residents and visitors.
In short, we have many plans. Specific work is carried out in every sphere. I am sure that all the goals will be met by the end of the year. We have already started doing the work planned for the next year.
Thank you.
