Closing speech by Ilham Aliyev at the at the meeting of the Cabinet of Ministers dedicated to the results of socioeconomic development in nine months of 2011

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.