Closing speech by Ilham Aliyev at the meeting of the Cabinet of Ministers on the results of socioeconomic development in 2011

I am confident that 2011 will go down in history as a successful year. All our socioeconomic indicators give reason to say so. I want to say again that all socioeconomic issues were resolved successfully and on time in 2011.

Year 2012 has begun. In order to complete 2012 as successfully, we must work hard. All our programs must be implemented on time. All our work is carried out systematically, according to programs. First of all, we have identified strategic directions and identified them correctly. There are specific mechanisms to meet these strategic objectives.

Financial resources, implementation mechanisms and, of course, professionalism – these factors will enable us to solve any problem.

I am sure that all the tasks will be successfully fulfilled in 2012. The state budget for 2012 is bigger than for 2011. Even more funding is envisaged. Of course, these funds will be channeled into the development and diversification of our economy. At the same time, this will enable us to implement all social programs and social infrastructure projects. State budget expenditure for 2012 is approximately $22 billion. This is the highest indicator in our history. A consolidated budget is about $25 billion. Of course, thanks to this budget all our social programs, welfare payments and social infrastructure projects will be successfully implemented. We must ensure execution of the state budget. I want to mention again, as I did in my opening remarks – this is a novelty for us and that main reason for that is our growing economic and financial capacity. I want all our tasks to be fulfilled soon. We are doing all this work fast. My instruction to all members of the cabinet and government agencies is to complete this work promptly and with high quality. We already have a great industrial potential and big companies.

Foreign companies are also involved in our investment projects and show an interest in them. We welcome that. I think we have all the opportunities for executing the investment part of the budget successfully.

We must make sure that the budget is fully executed.

At the same time, fiscal discipline must be at an even higher level. Budget must grow in parallel with responsibility.

There must be complete transparency. The transparency of investment to be made by the state must be provided in full.

The government will submit the investment program for 2012 to me in the near future. The discussion of this program is conducted continuously. I repeat that the state programs on the socioeconomic development of districts we adopted in 2004 and 2009 defined our strategic directions. And the investment program is based on this strategic choice. It is true that life goes on, new questions arise, new projects are launched. Naturally, we constantly make adjustments. But general directions of investment expenditure are clear.

I can say that all areas are of priority importance for us. But our top priority, of course, must be the creation of a socially-oriented infrastructure.

The State Investment Program will be quite extensive. It will have a portfolio of 5.7 billion manats. These funds can do a great job. This is only investment to be made by the state.

The private sector is also actively involved. I think that in 2012 the country's economy must receive at least at much investment as in 2011.

In 2012 we will continue to implement major infrastructure projects. Among them I want to highlight drinking water and sanitation projects. In previous years a lot was done to improve electricity supply, create generating capacities, improve gasification. Of course, this work continues and I'll talk about that. But projects related to drinking water and sanitation have been somewhat overshadowed. We should focus more on this area now as things are going better. In this area we are applying modern management systems and techniques that are widely used in the world. In Baku and other regions we are already starting to implement water and sanitation projects or they are in the pipeline.

Last year I set the task of implementing the main projects until 2013. If we can achieve that, all our district centers and cities will have stable supplies of clean drinking water and the sewer system which never existed before will operate to world standards by the end of 2013. I am pleased with the work done in this area in 2011. The funds are available, they will be envisaged in the State Investment Program. So some of the work will be done in 2012.

At the same time, irrigation projects are very important. They play an important part in developing agriculture and eliminating the unemployment. Large-scale land reclamation projects have been implemented. Some have been ongoing for several years. The Takhtakorpu and Shamkirchay projects require large resources. In 2012, these projects will be partly implemented through the State Oil Fund and partly financed from the state budget. Work is progressing on schedule. I always keep this issue in focus. In 2012, the implementation of these two major projects will be continued.

At the same time, we must allocate funds for other land reclamation projects. These two are large-scale projects. Tens of thousands of hectares of new farmland will be made available. Along with this, we should pay attention to smaller reclamation projects.

In 2012, we will be implementing gasification projects. Much of this work has already been done. But we have set the task of completing all technically and geographically feasible projects, the projects covering all districts by the end of 2013. If we achieve that – and I am sure we will, I simply want this done as soon as possible – then 95 per cent of our residential settlements will be provided with gas.

This work is now under way in cities and district centers. We have already started this work in villages. It must be stressed that we can achieve this goal before the end of 2013.

We have ample reserves of gas. We export gas to world markets and will increase our exports further. Therefore, we must and we will provide it to the fullest extent, i.e. 95 per cent, which is our maximum due to our geography, is possible.

Projects related to electricity hold a special place among investment projects. Last year, we laid the foundation of the Northern-2 power station. This plant is to be commissioned before the end of 2013. Its capacity will be 400 megawatts.

Although we generate more energy than we can consume now, we must always look ahead. Considering the further successful development of our country, the work we are doing and the projects planned, we need to know how much more funds should be allocated for power generation. The Minister of Economic Development has said here that the gross domestic product per capita is $7,000 now. We set the goal of doubling the GDP in the 2013-2023. How can we double it? Of course, by launching new enterprises. Economic growth will be achieved due to the real sector. Under such circumstances, the demand for electricity will further increase. If we add to this our export capacity – we currently export electricity to neighboring countries – then additional funds must and will be invested in power generation.

This year we expect to commission the large Southern power station. It will have a capacity of 780 megawatts and is built using modern technologies. Also this year we will open a 25-megawatt hydro power station in Fizuli District. In parallel with generating capacities, we must invest in distribution lines. In general, there are no problems with electricity in the country now. But outages sometimes occur in districts, and the main reason is the disrepair of power lines. Of course, we have focused on creating generating capacities and have fulfilled this task. Now – especially this year and beyond – we must invest in distribution lines. The entire work should be carried out at the level of modern standards.

In this connection I want to touch upon the following issue. A few years ago, the most serious issue in this area was the default of payment. We could not collect fees for electricity and gas. On the one hand, it happened due to an opaque and corrupt system. On the other, the process of installation of meters was at a low level. In some cases, the installation of meters was deliberately delayed for corruption purposes because it was possible to do anything without the meters.

Now the installation of meters is practically over. Modern smart-card meters are being installed, contacts between supervisors and the public have been eliminated. No-one should knock on the door and take a bribe. This will never be the case.

Thus the losses are also reducing. If we make the necessary investment in distribution networks, especially in the districts, the losses will decline. The collection of payments for electricity in Baku exceeds 90 per cent now. This figure is almost the same throughout the country. Gas payments are also at a high level. Earlier, the rate of collection of payments was 20, 30 and 40 per cent, perhaps even none at all. So this issue has also been resolved and, as I said, we must take this into account in the investment program.

Today, the Minister provided information about the work done in the telecommunications sector. This sector is also developing successfully in Azerbaijan. This year we will launch Azerbaijan’s first telecommunications satellite. It will be a historic event. Azerbaijan is creating its own space industry. Azerbaijan is joining the countries that have a space industry. This is the result of our forward-looking policy. I think that all available progressive and advanced technologies must be brought to Azerbaijan. We bring and introduce them here and train qualified personnel. This will elevate both our political clout and economic strength. The telecom sector is a concentration of various factors that are important for the development of any country. It means innovation, knowledge and expertise. At the same time, it is a major business area. So we will receive additional revenue for the country's economic development. This is an area that facilitates scientific and technical progress. In the future, the ICT sector must and will become a leading sector in the world. Those moving forward in this area will enjoy authority. The present-day world is different from what it was 10, 20 years ago.

Technology, information security, security against cyber attacks have come to the fore, and the future balance of power will be determined in this area. So we must and we do pay a lot of attention to this area. This policy didn’t begin yesterday, it began several years ago. I am very pleased that according to the estimates of international telecommunications institutions, Azerbaijan is a CIS leader. We have free Internet access. I can say that not every country has free Internet access. The number of Internet users is growing, which I think is a very positive development. Our children and youth are working on the computer. This is the future. It is the freedom of information and speech.

Azerbaijan has a democratic society and we must further strengthen the democratic foundations. Where there is free Internet access, there is freedom of speech. This is natural. So this area must be a leader for reasons for security, development, knowledge, business, and for shaping up future generations. This must be the case. Thanks to the situation emerging as a result of economic diversification for the future development of our country, we are in one of the leading places in this regard. Now we must be among developed countries of the region and in the future on a global scale. I am very happy that the traditional Bakutel exhibition conducted in our country annually presents itself as a large and prestigious show. The number of visitors is growing, companies are showing interest. When those interested in making investment see that the Azerbaijani government pays attention to this area, creates a space industry and launches the first satellite, they show great interest. I repeat that this is the first satellite, but not the last one. It will be followed by a second and third. So we will create a powerful industry. We have effective cooperation with international organizations in this field. The world’s leading ICT companies treat Azerbaijan with great interest and respect.

In 2012, we must further strengthen food security measures. The work being done in this field is positive. This year we have achieved major growth in agriculture. Farmland and yielding capacity are expanding. In particular, productivity in grain growing is increasing, which is very positive.

I am confident that as a result of the measures taken, the creation of large farms and their support on the part of the state, land reclamation activities, provision of farmers with fuel and fertilizer on easy terms, agricultural leasing activities, etc., we will secure long-term and sustainable development in this area.

Several years ago I set the task of providing ourselves with staple foods. A lot has been done in this direction. The vast majority of merchandise sold in our points of sale now, i.e. food products, are made in Azerbaijan. If we look back, we see that there were no local products. Now our products are not inferior to foreign ones – in quality, packaging, appearance or taste. Our products, especially fruits and vegetables, are natural. They are “organic” in the world. Everyone coming to Baku and Azerbaijan is amazed with how delicious and natural our fruits and vegetables are.

This is our great wealth. We must take care of it. We must ensure agricultural development, in particular the development of the fruit and vegetable sector, without compromising quality. Now there are modern technologies.

The Minister of Economic Development has recently informed me that they are introduced in Azerbaijan too. In the field of horticulture, greenhouses are built in accordance with modern technologies. These issues are dealt with by the Ministry of Agriculture. Of course, this will increase crop production. But at the same time, we must pay constant attention to quality and, most importantly, to the taste of fruits and vegetables.

So the task set some time ago is being fulfilled. In 2011, major resources were allocated by the state through the National Fund on the Support for Entrepreneurship. In 2012, we will reach a record level: entrepreneurs will receive 200 million manats in concessional loans. I am very pleased that entrepreneurs are provided with financial support and good advice, are offered various business plans depending on their financial possibilities. We treat entrepreneurs with great attention. I don’t know of another country where there is such an approach.

Farmers are receiving fuel and fertilizer on easy terms and hardware on agricultural leasing.

Agricultural service enterprises have been established. Pedigree cattle is brought and provided to farmers. In addition, concessional loans are provided. This year 200 million manats in loans will be granted. Business plans and investment projects are prepared – business plans for 1 hectare, 5 hectares, 25 hectares. So the entrepreneur only needs to do this work. Late last year we laid the foundation of a nitrogen fertilizer plant. We will fully provide ourselves with nitrogen fertilizer and export it. This fertilizer will also be sold at low prices. We have ample reserves of gas. Of course, we will supply gas to this plant on concessional terms in order to increase profitability. So I repeat that a lot has been done to provide for ourselves. This work will be continued this year, next year and in the future. We must think about the future now.

We can provide ourselves with many items or will be able to do so this year or next year.

Our poultry production was at a low level. Now, as a result of the measures taken and the new poultry farms to be built in 2012 and 2013, we will fully provide ourselves with poultry. We are building dairy farms and canneries, developing horticulture and crop production. In crop production we will probably depend on imports for some time. But as far other items are concerned, we can either provide ourselves already or will do so in one to two years. The question arises: what next? Now we are investing heavily in agricultural development, creating large farms, plants and factories. There is a class of entrepreneurs in Azerbaijan. They spend part of their earnings on new enterprises. So in four to five years we will need additional markets. Now we have traditional markets where Azerbaijani products are in demand. But we must look ahead. Our potential is likely to be several times higher than our current exports. So I have given the Ministry of Economic Development relevant instructions because they have broad connections, we arrange business forums with various countries.

So there is a great interest, our external relations are expanding and we should access foreign markets even more assertively. We should help our businesses. This topic should always be on the agenda in talks with our foreign political partners. We will need foreign markets. We should access traditional and new markets even more. Azerbaijan’s processing industry is producing excellent products that are exported to Europe and America. The number of such products will grow and we must see what further steps can be taken to access new markets – I am not talking about finding new markets, it is not too difficult to find them.

At the end of last year, we adopted the state program on the development of viticulture. This also demonstrates our intent. Viticulture has great traditions in Azerbaijan. On the initiative of great leader Heydar Aliyev, large vineyards were established in Azerbaijan in the 1970s and early 1980s. Azerbaijan used to produce two million tons of grapes.

Azerbaijan was the biggest producer in the USSR. But then, as a result of the anti-alcohol campaign, vineyards were destroyed only in Azerbaijan for some reason. Such barbarism didn’t happen in Ukraine, Georgia, Armenia and Moldova. It was a manifestation of the then Soviet leadership’s negative attitude towards Azerbaijan. Both Soviet leaders and their local sycophants sought to destroy vineyards as soon as possible and report: we are carrying out your instructions. Their anti-national actions caused the destruction of our vineyards. Azerbaijan used to give two million tons of grapes. Now we produce 130,000 tons. The same land, the same conditions, the same climate. So this is possible. Therefore, the objective of the state program on the development of viticulture is to pay more attention to this area. However, there are other plants in place of the vineyards now, so we need to consider that. But I think there is a great potential and markets. State support for this area, of course, should be even greater and long-term. We all know that it takes a lot of time to set up vineyards and grow grapes. In any case, we have started this work and it will be continued.

We have resolved most issues regarding storage of products. A sufficient number of refrigerated warehouses have been built. I am told that they will be built this year too. Granaries are also built. We are creating these conditions to store products and maintain prices at a normal level.

I am very pleased that there were no price increases on the eve of the holidays – the New Year and, before that, on Eid al-Adha. In some cases prices even went down. This is also a good result, a good indicator that there is proper control over the market. We are fighting those engaged in speculation, and this struggle must be constant. So these developments, the situation on the eve of the holidays show that this struggle is possible. All relevant agencies should work in good faith, prevent artificial price increases and cases when some people become unjustifiably richer at the expense of others. We are raising salaries, wages and pensions. Our major investment projects perforce lead to higher prices. We can’t invest $20 billion and expect this not to affect inflation! The fact that we keep inflation at 7.9 per cent is already a great achievement. We can’t afford raising salaries and pensions at the expense of the state budget and having someone take advantage of that to immediately raise prices. We must and we will fight against such phenomena.

Those who oppose our policies or wish to receive unsubstantiated earnings will be punished severely. I repeat that the latest developments in this area have been positive. I support that and will keep this matter in focus.

Last year we adopted a program on the development of Baku and its suburban settlements. There was a great need for such a program. A few years ago we adopted a similar program and some work was carried out. This time, the program is more specific and short-term – it covers 2011-2013. Considering that we started the program in mid-2011, it means that we need to address all the issues in the suburban settlements in two and a half years. It is a very challenging task. I know it is difficult. But I think we can solve these issues in two and a half years. If I didn’t think so, I would have said: 2011-2015. No, we can do it. Judging by the way the work has been started, I think we should achieve our goal. The entire infrastructure in the settlements must be and is upgraded. We are now focusing on power lines, gas supply, sanitation, drinking water, roads. The social infrastructure – schools, medical centers, centers of culture – should be completely renovated in all the settlements. I have personally visited many settlements since we started the program – in general, I regularly visit the Baku suburbs to examine the situation and give instructions. After a while I will make another visit to see how things are going. Generally, I review the progress of work in every region. In some cases, it is impossible to visit the districts every day, but the suburban settlements of Baku can be visited every day. I will make visits once a week. I must be pleased with the work done. And not just me, but the people. And if the people are pleased, so am I. We have the resources to achieve these goals. They are available and will be envisaged in the investment program for 2012.

The work should be done with high quality and on schedule.

This work has been entrusted to the Mayor’s Office of Baku and the Ministry of Economic Development. They work together and exercise control. But I can say that along with positive aspects, there are negative facts. A lot has been done over these months. Sometimes, however, the work was done in haste and at the expense of quality.

There must be multistage control. I personally will give final clearance. So let me say this in advance: all the agencies dealing with this issue and the contractors should take responsibility for the work. If a company works poorly, it will remedy the deficiencies at its own expense, if it is a state-owned organization, it will be punished severely. If we complete this program before the end of 2013, then, I want to repeat, we will resolve all the issues of social infrastructure in the settlements. In addition, instructions have been issued to create jobs in suburban settlements. The allocation of funds through the National Fund on the Support for Entrepreneurship started in 2011. Earlier, the resources allocated by the Fund were channeled only into the districts. In 2011, the suburban settlements of Baku received 25 per cent of the funds, while in 2012 the figure will constitute 30-40 per cent.

In 2012, we will continue establishing the social infrastructure both in Baku and the districts – schools, hospitals and Olympic centers will be built. Now we are building 10 Olympic complexes. Preparations are underway to build three more complexes. Kindergartens must be renovated and their number increased. Appropriate instructions have been given. I think we achieved major progress in this regard in 2012 – conditions and provision have improved. The Finance Minister has provided several suggestions regarding provision. I support them. Based on these proposals we should establish a new modern system, in particular for feeding the children. We must use international experience. If we can implement these suggestions, then every child and every parent will see very significant and positive changes in this field.

In my opening remarks I expressed my thoughts on army construction. I want to note that in 2012 we will be addressing logistical issues and the repair of buildings in military units. I have set the task of repairing the buildings in all our military units, perhaps building new ones. We must create new military bases and camps. Those serving in the army must serve in good conditions. Both living and working conditions in the army must be good. They serve in difficult and harsh conditions, often in cold and heat. All the military units, primarily those located at the contact line, should be renovated in 2012-2013, the accommodation and service infrastructure rebuilt. Specific measures are taken to improve the social status of servicemen. First sergeants and officers with a good service record of 20 years will be provided with flats by the state.

A lot is done to improve the living conditions of the IDPs. Deputy Prime Minister Ali Hasanov has also provided substantial information. Indeed, a lot is done. Even more will be done. We celebrated the opening of new settlements last year, we will celebrate more this year. I think we must spend at least twice as much as we plan on these issues in the current year. At least twice, maybe even three times. It is a serious and important issue. Ali Hasanov said here that poverty among the IDPs has dropped from 70 to 18 per cent. This is a great result. But this figure in the country is 7.6 per cent, i.e. the rate of poverty among the IDPs is twice as high.

We are improving the situation, but should improve it even more. Therefore, the number of IDP settlements should be increased. As for the hostels, the program also stipulates that. We need to resettle the IDPs from Finnish homes and hostels to good apartments. This requires money. This is why I am saying that we are allocating major funds. I don’t want to name exact figures now – this issue is under consideration in the government. It should be at least twice as high as we plan.

In 2011, we also took environmental measures and planted seven million trees. I am very glad that this area is in focus even after the Year of the Environment. And that’s the way it should be. Prepare specific proposals for 2012! There probably are such proposals, we will consider them and allocate funds. Environmental measures are important for every citizen.

In 2011, modular water treatment plants were commissioned in 32 villages and 50,000 more people began to drink clean water last year alone. They used to consume untreated water before. This program must be continued in 2012.

The process of cleaning up polluted areas is ongoing. The Balakhani landfill has been turned into a park. This was probably the most deplorable place in our country from the environmental standpoint, it was in a catastrophic plight.

Those who saw the Balakhani landfill were appalled. City residents could see smoke billowing from there and enveloping the entire Baku. Now there is a park there, a landfill has been created on an area of 100 hectares, trees planted and modern systems established. All vehicles delivering waste there are disinfected. This is a modern approach. At the same time, the construction of a waste disposal plant is well under way.

The Azerbaijani government has allocated major funds. I do hope that the plant will be opened this year. This will be our biggest contribution to the environmental situation.

Industrialization is ongoing, industrial parks are established. The Sumgayit Industrial Park is expanding its activities.

Besides, very important decisions were made last year. An industrial park will be set up in Balakhani, a chemical park in Sumgayit, jobs will be created. The goods produced in the chemical complex will be used by private organizations and companies. Areas have been allocated, communications and infrastructure created. Entrepreneurs simply need to come and work there, we will help them.

This year we will also create additional opportunities for industrialization. A new aluminum plant will be commissioned in Ganja. This is a great event. It is a major step for the development of the aluminum industry. But this is the first step. We should pay more attention to metallurgy. This area also has great opportunities. If we consider that we have enough metal, it should be used rationally. Products are delivered from abroad now. We have ore deposits in Dashkasan.

Creation of a powerful steel industry is on our agenda and we will do that.

It was mentioned here that a cement plant based on modern technologies is under construction. It will be commissioned by a Swiss company this year. Another cement plant is also being built. So we must make sure that we can fully provide ourselves with cement in the next three to four years. Of course, our needs are growing, but there are opportunities for that.

We need to encourage private investors, create favorable conditions for them to invest in this area. The state should provide assistance too. We must fully provide ourselves with building materials. Late last year I attended the opening of several plants. Things in this area are going well.

The fight against corruption and bribery must be continued with utmost severity. In 2011 we did a lot in this regard. But we should do even more in 2012. This struggle should never stop, it should be waged permanently. This struggle has good results, but they can be better still. We will apply punishments, administrative and institutional measures. We will conduct system transformation. According to my order, all ministries and government agencies have submitted proposals on the activities of the “Electronic government”, transparency and efficiency of permitting issues in business and e-services.

There is international experience, good practices, the experience of the European Union. We must always learn from good experience.

I am not saying that we should apply all their innovations. It would be impossible. We can never apply the initiatives that sometimes contradict our mentality. But we must apply positive and useful practices, especially in this area.

Finally, I want to address the last question. The Summer Olympic Games will take place in 2012. We are seriously preparing for the games. In 2011 we won a sufficient number of licenses. We have won victories in world and European championships, so we have high hopes. In 2012 we will build 10 Olympic complexes. The construction of the great Olympic stadium will enter into an active phase. A large 65,000-seat Olympic stadium is under construction. The national stadium named after Tofig Bahramov is undergoing repairs now in preparation for the upcoming World Championship among girls due in Baku. Other sports facilities are under construction. We are building a large gymnastics complex, the Baku Sports and Concert Complex “Crystal”. So, as always, this area has received considerable attention. In 2012, there will be events in the country, preparations for the Olympic Games and the Olympic Games proper. I therefore think that we should declare 2012 the Year of Sports. This is my opinion on the matter, so prepare an appropriate order for signing today.

Thus, 2012 is beginning. There is a lot of work in the offing in 2012. I expect everyone to be active, dedicated, conscientious and committed to victories. Thank you.