President Ilham Aliyev has chaired a meeting of the Cabinet of Ministers dedicated to the results of socioeconomic development in nine months of 2012 and future goals.
The head of state made opening remarks at the meeting.
Opening remarks by President Ilham Aliyev
- The country's economy is developing successfully and the results of nine months clearly confirm this again. All our macroeconomic indicators are on a high level, in nine months our economy grew by 1.1 per cent. But our non-oil economy grew by 10.3 per cent. This is the most important indicator of recent months and years because our goal is to develop the country's economy in a diversified manner. Of course, the development of the non-oil economy will enable Azerbaijan to significantly reduce its dependence on the oil and gas factor in the future.
Landscaping and creative work is ongoing in all our regions. New industrial enterprises are emerging. I am sure that our non-oil economy will remain at a high level until the end of the year. At the same time, it will enable us to successfully continue the policy of diversification in the economic sphere next year too.
In the first nine months, a total of 16 billion dollars was invested in the country's economy. This is a very big number. It is much bigger than last year. If we take into account the fact that investments of approximately this level are made in the economy every year, we can see how much is invested in the Azerbaijani economy. Most of this investments is domestic – about 70 per cent. The rest is made up of foreign investment. I believe that this is the best balance. Our economy is attractive to foreign investors. At the same time, domestic investment primarily indicates that the state is pursuing a very successful investment policy. Because the vast majority of domestic investment is made by the state. At the same time, the private sector has also been successfully involved in these investment projects. The private sector – both local and the foreign business community – has a lot of confidence in the Azerbaijani economy. If it were not for this confidence, then, of course, so much investment would not be made.
I can say that, in general, the private sector retains a large share in the gross domestic product. According to the latest information, 83 per cent of the country's economy is formed in the private sector. This, in turn, indicates that the principles of the market economy are fully embedded in Azerbaijan.
Agriculture has grown by 6.3 per cent. This is also an excellent indicator. I will express my views about that later. But I want to say from the very beginning that this area, as ever, remains a priority area and we should pay even more attention to it in the future. I am very glad that the instructions I gave some time ago are being fulfilled. Agricultural development will enable us to become less dependent on imports. At the same time, the creation of jobs and the launch of industrial enterprises in our districts are directly linked to the development of agriculture. Therefore, I believe that the 6.3-per-cent growth is a very good indicator. We must strive to maintain this high pace in the future too.
Since the beginning of this year, the strategic currency reserves of the country have increased by almost $5 billion and currently stand at $45 billion. I can say that this is a very large figure by global standards. Azerbaijan is among the countries that have large currency reserves. By the size of its territory and the country’s population, I think, if we calculate our foreign exchange reserves per capita, we are in one of the leading positions in the world. It is a very gratifying fact that despite the implementation of major investment projects by the state, our strategic currency reserves are not reducing. On the contrary, they are increasing. We must strive to ensure that we do not fall below a certain level in the years ahead. Because this is our backup source. At the same time, despite the fact that the global financial recession has led to a reduction of interest rates which prevents us from receiving large enough profits from the management of these funds, we are studying new ways of managing our currency reserves. Thus, I am sure that the profit margin of our resources will be at an even higher level.
All of these indicators suggest that development in the economic area has been very rapid. Of course, this development leads to a better quality of people’s lives. In nine months, population incomes grew by 12 per cent, while inflation was only 1.5 per cent. As you can see, the difference between inflation and the monetary incomes of the population is 10 per cent, and I think that by these indicators Azerbaijan is in one of the leading places in the world. All our economic initiatives and our economic strategy as a whole are aimed at improving the well-being of the people of Azerbaijan. We have made great strides in this direction and these figures are a logical result of the work done.
The situation with industrial production is not encouraging enough. I want to express my thoughts about this in a little more detail so that the Azerbaijani public is also aware of the situation. This is not the first time when we have voiced some rather unpleasant figures regarding industrial production at a meeting of the Cabinet of Ministers. Every quarter, every year, in particular for the past few years, the total industrial production in Azerbaijan has been declining. Earlier, we simply stated this as a statistical indicator. But we practically did not go into explaining this was happening. It was believed that this is a temporary process, a temporary problem, that this problem would be resolved, that industrial production would not only stop declining, but would also start growing soon. But the figures for nine months show that total industrial production in Azerbaijan has dropped by 3.5 per cent, while our non-oil industry grew by 7.7 per cent. On the one hand, this is a logical result of the reforms we have carried out in the economic and industrial spheres. Because our country is underground an extensive process of industrialization. A few years ago, I gave specific instructions on this issue and we are seeing great results of those instructions. The fact that our non-oil industry grew by 7.7 per cent is a great achievement.
But the reduction of the oil industry troubles us more, of course. This process, the decline observed in this industry, the recession is directly related to the decline in oil production. And here we have to divide the issue into two parts. Because oil production in Azerbaijan is handled by the State Oil Company of Azerbaijan. On the basis of the agreement signed on the fields of Azeri and Chirag in 1994, an international consortium, the Azerbaijan International Operating Company, was set up and the Azerbaijan International Operating Company was the operator. At subsequent stages, there was a process of merger between companies that were members of the consortium, which is why operatorship was entrusted to bp. From that time to the present day, major successes have been attained in the realization of our oil strategy.
We are justly proud of our oil strategy. Because the successful economic development of Azerbaijan, its growing political clout and active participation in global developments are directly related to our country’s economic potential. And the economic opportunities have been provided to us by our oil strategy. And it is true that, unlike some other countries, we have effectively used these opportunities by channeling the oil capital into the development of the non-oil sector. Thus, the implementation of infrastructure projects and other economic reforms have actually enabled us to proudly tell our people about today's reality. But due to the serious mistakes committed by the consortium, oil production from the fields of Azeri and Chirag has started to dramatically decrease in recent years. This is not the first year when oil production has dropped. Of course, people working in the oil industry, oil experts will know that every oil field has a certain life. Production increases, reaches a peak, then remains stable for some years, but then starts declining. So this process is well known to any oil expert. But this is not to say that we have reached a peak which is, of course, as they say, followed by a decline. The point is that the forecasts made are not being fulfilled. I can also say that the agreement for the fields of Azeri and Chirag was signed on production sharing terms. Initially, production sharing was somewhat different. In those early stages, the share of foreign investors was bigger – about 75 to 25 per cent in favor of the foreigners, so to speak. After they recovered their investment, the sharing began to change – at the level of 50 to 50 per cent. In mid-2008, taking into account the profitability of Azeri and Chirag and the terms of the contract, production sharing terms changed in favor of Azerbaijan. And now, from mid-2008 to the present day, it is 75 to 25 per cent. So 75 per cent of the profit oil is Azerbaijan’s. I want to say again that after production sharing conditions changed on the basis of the contract, oil production from Azeri and Chirag began to decline for some reason.
I want to add specific figures to my words. In 2009, the forecast we received for production from the fields of Azeri and Chirag was 46.8 million tons. And in fact, oil was produced at the level of 40.3 million tons. In 2010, the forecast was 42.1 million tons, but 40.6 million tons were actually produced. In 2006, the forecast was 40.2 million, while actual production was 36 million. In 2012, the forecast is 35.6 million tons. Given the current production, it can be assumed that bp will be unable to produce more than 33 million tons of oil from Azeri and Chirag by the end of the year.
By summing up all these figures, taking the price of oil of $100, although it was even higher in those years, and making some calculations, we can see that Azerbaijan has under-received $8.1 billion dollars in revenue. This is a reality. Small statistics reflects reality. Therefore, oil production reducing year after year, month after month and quarter after quarter is the logical result of this situation.
I can also say, and I have already talked about this, that major investments were made in the oil fields of Azeri and Chirag. For this we are grateful to all the investors. I repeat that this investment enabled Azerbaijan to become one of the fastest growing countries in the world today. But I want the public to know that this investment was not a charity project. This is a purely business project. I want to give you some more figures. From the beginning to the present day, the bp-led consortium has invested $28.7 billion in the oil fields of Azeri and Chirag. To date, the consortium has received revenue of $73 billion. So a large profit has been made. Of course, this profit was made possible under the contract. Of course, Azerbaijan has also received a large profit. Much of our foreign reserves, which now stand at $45 billion, is made up of the Oil Fund resources. So much money has been spent over the last 12 years. The State Oil Fund was established in late 1999 – in December. The main source of the funds invested in the economy from that time to the present day, the investment made in infrastructure projects, the construction of schools and roads, landscaping – all this is our oil industry. Therefore, this is a purely commercial project. I think that all the promises and forecasts must be fulfilled. I should note that this unexpected decline is the result of serious mistakes committed by bp, the company leading the consortium that operates Azeri and Chirag fields. We have cooperated with bp for many years. We have always supported its activity, supported it in its most difficult days. We expected an adequate approach. These erroneous forecasts are unacceptable. The false promises given to the State Oil Company are unacceptable. In a world of business, business of such level, such an attitude is out of place, it is impossible.
We have always been fair to all our partners – both in politics and in the economy. We have always kept our word. We expect the same attitude. I think that very significant changes should be made over this issue. Why do I disclose information related to this issue today? Because last month bp gave me an official word that all these negative phenomena would be eliminated in a short time. All the mistakes were admitted. It was recognized that the situation was not very encouraging.
I was promised that very significant changes would be made in a short time, that the work program would be amended, that specific measures would be taken to maintain production at a stable level and, most importantly, that those who have committed these blunders would be replaced. But from that time to the present day – it has been almost a month – I do not see the implementation of these promises. On the contrary, I think there is a process of buying time. So I think this is totally unacceptable. The state oil company has been instructed to raise this issue in an official manner and take necessary action.
The investors who are can’t perform their duties and fulfill the terms of the contract should draw conclusions, strict measures should be and will be taken.
Thus, if we don’t take into consideration these unpleasant events in the economic sphere, the overall situation is very positive. The economic reforms carried out in our country are highly valued by international financial institutions. Last quarter, one of the most respected economic structures of the world – the Davos Economic Forum, published an updated ranking of countries, and Azerbaijan is in 46th place in that ranking. We are in first place in the CIS and in 46th in the world. Compared to last year, we have moved nine steps higher. In other words, this shows that Azerbaijan’s economic development and progress are connected with economic reforms. This report also contained a rating of macroeconomic situation. In terms of macroeconomic stability Azerbaijan is in 18th place in the world. So I think there is no need to explain what it means to be in 18th place in the world in this area. The main rating agencies which are now reducing the credit ratings of developed European countries are raising the credit rating of Azerbaijan. Fitch, Standard & Poor's and Moody's, i.e. the three major rating agencies, have upgraded our credit rating, and this has been possible as a result of the work done, the reforms. So this process of economic development is such that this development and progress can be seen firsthand. At the same time, they are reflected in the statistics.
Let me reiterate that in other areas too, in the area of addressing social issues, there are also great results. As you know, the process of repayment of compensations for the deposits remaining from the Soviet era has begun. Of all the CIS countries it is in Azerbaijan that these funds will be provided in the shortest possible time and at the highest interest rate. This also shows how extensive our social policies are.
The average monthly wage and the average pension have been increased and this figure is also among the highest in the CIS.
For comparison, this calculation is often made in US dollars. In Azerbaijan, for instance, the average wage is 500 dollars and the average pension is 190 dollars. This is rapid growth, but we can not be content with that. Although it is possible to make comparisons and show off our success, I believe that even greater success will be achieved in this area in the coming years.
This is a steady process, pensions and wages are rising from year to year. At present, pensions in Azerbaijan account for 40 per cent of the wage, which is at the level of criteria of developed European countries.
Things in the regions are going very well. My trips to the regions give me the opportunity both to get acquainted with the situation on the ground and provide additional guidance and further funding. All our regions are experiencing recovery and development, are implementing infrastructure projects and creating new jobs. Since the beginning of this year 94,000 jobs were created, of which 73,000 are permanent ones. Since the start of the program on the socioeconomic development of the regions in 2004, a total of 1.1 million jobs have been created, including 800,000 permanent ones.
I repeat that major progress has been made in all other areas, in the field of construction, landscaping, creation of the social infrastructure. During the year we have built 188 schools and additional school buildings, 103 schools have been renovated.
This process has assumed wide proportions both in Baku and in the regions. As for Baku schools, by the start of the next school year there will not be a single school in unsafe condition. Besides, there will not be a single school left without renovation. A lot of work is being done in this direction in the regions. Most likely, it will take a little more time to fully address this issue in the regions.
Our sportsmen delighted us last quarter. Azerbaijan has demonstrated great results at the Olympic and Paralympic Games.
Our Olympians reached 30th place in the world. For the number of medals they finished in 24th and for their value in 30th place in the world. Among European countries they finished in 15th and among Muslim states in 3rd place. We have won 10 medals – two gold, two silver and six bronze. It is a great and historic victory. Our Paralympians managed to take 27th place.
They have won 12 medals, of which four are gold. So I repeat, this has both delighted and inspired us. At the same time, it demonstrates the strength of our country and the potential of our youth.
Because sport is an integral part of each country’s life, a very important factor. The development of sport demonstrates the overall development of the country. Usually sport grows rapidly in economically strong and politically stable countries. The development of sport requires public funds, state support, the training process should be conducted at a high level, infrastructure projects are necessary. In Azerbaijan, there are 35 regional Olympic centers and about 10 more Olympic sport centers are under construction.
In other words, the past quarter and the first nine months of this year have been successful for the economy on all fronts. Major successes have been made in the international arena. We actively participate in the meetings of the UN Security Council and demonstrate our principled position.
When we became a member of the Security Council in October last year – about a year ago – I said in my address to the nation that we would defend justice and international law in this organization. And, as always, we keep our word. Our position is viewed with great sympathy and great respect. Because, I want to say again, we defend justice and international law. At the same time, the support we were given during the vote already manifests itself in other formats. As you know, Azerbaijan’s candidacy was supported by 155 countries. During a recent summit of the Non-Aligned Movement, 120 countries adopted a resolution on the settlement of the Armenian-Azerbaijani Nagorno-Karabakh conflict only and only within the territorial integrity of countries. This is yet another diplomatic success and yet another defeat of Armenia. Because 120 countries make up the majority of the world community. There are a little more than 200 countries in the world. Of them, 120 support our territorial integrity and see a settlement only on the basis of these principles. If we take into account the decisions and declarations of the NATO Chicago summit – of course, NATO members cannot be members of the Non-Aligned Movement – it was also publicly stressed there that the Armenian-Azerbaijani Nagorno-Karabakh conflict must be resolved on the basis of the principle of territorial integrity. This is also another defeat of Armenia and another success of ours. That is, three quarters of the world community see a solution to the problem based on the principle of territorial integrity. Of course, this is a very fair position, there can be no other position, no other options to address the issue.
As to the principles of self-determination of nations, the Armenians are trying to mislead the international community. The decisions and declarations I have mentioned destroy this false propaganda. The principles of self-determination of peoples should be provided within the territorial integrity of countries. This is exactly how the issue is defined in the documents of the Helsinki Final Act. Therefore, all these diplomatic successes, political victories and our ultimate victory over Armenia further inspire us and bring us closer to the settlement of the issue.
We have to become and are becoming even stronger. We are strengthening our international standing and enjoying great support in the world. At a recent opening of the Azerbaijani Diplomatic Academy and the meeting with the ambassadors of our country abroad, I broadly outlined my strategic views on foreign policy and do not want to repeat anything now. I want to say the following: we are now acquiring new partners in the world and seeing that there is a great interest in Azerbaijan on the continents that are non-traditional for us. In particular, in Latin America. We, too, are establishing very close ties with the countries of Latin America. And we see that these ties are very sincere and are based on mutual respect, mutual interest and friendship. It is on these principles that the relations with each country should be based. We have repeatedly stated this. I have repeatedly said that Azerbaijan recognizes only equal relationship. If someone thinks that they can impose their will on us, they are mistaken. We recognize only the principles of equality, mutual interest and non-interference in each other's affairs. It is on the basis of these principles that we are building close relations with countries of Latin America. And I think that this is a very promising direction both for our foreign policy and for addressing economic issues. The foreign political sector and the agencies dealing with economic issues have received appropriate instructions that we need to further improve the relations with countries of Latin America. Of course, we have friendly relations with our traditional partners. Naturally, these relationships will be continued.
Closing remarks by President of Azerbaijan Ilham Aliyev
- There is less than three months for the end of the year. I am sure that all the planned issues will be resolved in the time remaining. In particular, the implementation of the state investment program will be completed. Because I can say that the state investment program plays a major part in the economic development of our country. This program expands with every year. Its volume increases and new directions appear. Therefore, I believe that our successful economic development will be continued for the rest of the year. We already need to determine the social and economic outlines for the next year. In fact, we are doing that. We have to make sure that the macroeconomic situation remains stable next year.
In my opening remarks I mentioned that according to the calculations of the Davos Economic Forum, one of the world’s most respected economic structures, Azerbaijan is in 18th in the world for macroeconomic stability. Of course, this is a very high indicator. In fact, it shows that this area will be stable in the years ahead. This year’s inflation is at its lowest level in recent years. We must strive to reduce the risk of inflation to a minimum next year. To achieve this, we have large enough mechanisms, tools and instruments. The results achieved in this field have special significance. Because the money invested in the economy increases every year. Our state budget is growing. At the same time, we took a very serious political decision this year, which can give rise to inflation. We have begun the repayment of compensations for the deposits remaining from the Soviet era. As you know, when new money appears on the market, inflation risks inevitably rise. But although citizens have already received a large amount, inflation is low. This is evidence of our large reserves, sound macroeconomic policies and, in general, prudent economic policies.
Therefore, we constantly deal with this issue, and relevant agencies, economic bodies, the Central Bank keep the matter under control. We have to maintain inflation risks at the minimal level next year.
In recent months, we were also seriously engaged in disaster relief.
Unfortunately, Azerbaijan has been faced with natural disasters in recent years. Two years ago there were major floods. This year there was a serious earthquake. I have twice visited the quake zone – shortly after the earthquake and last month. I saw good results of the work done. In a short period we have built schools, built and restored homes. Fairly large amounts were allocated for this purpose both from the Contingency Fund of the President and from the state budget – funds excess of 300 million manats. We should strive to arrange the remaining funds in order to completely resolve this issue in a short time. But that is a very large amount of work. Thousands of homes were destroyed and fell into disrepair, and the state of Azerbaijan assumed this financial burden again. I have expressed my opinion about that. During floods and earthquakes, we should strive to apply progressive experience in this field. This is the time for this. I also want to say that in every country, i.e. in developed countries, disaster relief in the sense of building houses is never carried out from the state budget.
All the houses are insured. Every citizen insures his own home. After that, if there is a mishap, the insurance company pays the compensation. Of course, no-one can predict natural disasters. Earthquakes are a problem no country can prevent. So I think we have to seriously address this issue. We should apply a new system. We should study the experience of developed countries and the government should make specific proposals on this issue in the near future. Of course, awareness work and other measures will be undertaken. We must resolve this issue once and for all because every time the government allocates hundreds of millions of manats for this purpose. This, of course, is additional burden on the state budget. Besides, it is not a very serious and systematic approach. By conducting our social policy and empathizing with those in distress, we take such steps. But everything needs to go be done systematically, and I am sure we can create a proper system in this area.
The process of settling the IDPs is ongoing. This year, a record amount of 300 million manats is to be allocated from the Oil Fund. These funds are used for the construction of new settlements. I have attended the opening of such settlements and seen that we really give people joy, take them out of a difficult situation and provide with normal conditions. I think that next year we will have to allocate funds at least at this level – 300 million manats. It is a large amount, and next year we will also take measures to settle the IDPs and improve their livelihoods. There are still people living in difficult conditions.
Of course, the concept of “tent camps” has been gone for five years. But there are still many IDPs living in kindergartens, military units, dormitories. We will facilitate their plight. At the same time, we have major plans regarding kindergartens.
All the kindergartens in Baku are being renovated, the instruction has been given to build new ones because the existing opportunities meet only 20 per cent of the needs. Most kindergartens were built in Soviet times when the population was not so large. The population is growing and so is demand, and when parents see that the situation in kindergartens is very good, they want to send their children there but can’t. Earlier kindergartens were so poor that no parent wanted to send their child there. Now the situation has changed. So the investment program for next year should consider the construction of kindergartens and, perhaps, the construction of new buildings at the existing kindergartens. This is a very remarkable phenomenon. I always mention this when I see that both schools and kindergartens cover very large areas. It was a very positive policy of the Soviet period. Now these areas can be and are used for the construction of new buildings. At the same time, we should allocate new areas. Therefore, we will tackle these issues and I am sure that we will achieve even greater success in the coming years.
The implementation of infrastructure projects in the districts is in full swing. We act on specific programs in each area.
Gasification is under way. While visiting the countryside, I always enquire about gasification and water projects. We can say that everything is going according to schedule. Recently, we marked the implementation of the first water project in Zardab District. In a few days the people of Zardab will consume clean drinking water from a natural source. This is a great and historic event. All the district centers and cities will be provided with clean drinking water in the next period. Specific instructions have been given and a fairly large amount envisaged in the investment program for next year to achieve these goals.
We are also working hard on other areas related to regional infrastructure projects. Highways, inter-city and rural roads are built. I can say that this year we have invested the largest amount in the history of modern Azerbaijan in rural roads. In each district we build rural roads which link villages, towns and district centers. This is hugely important. It is also a social issue, we do it for people’s comfort. It is also an economic issue. In some regions I was told that if there is a rural road, it will open up opportunities for tourism in the region because rural roads are the main condition for the development of tourism. We have to consider that we have tourist areas, mountains, and sometimes people can’t access these beautiful and scenic places. So we consider these issues individually. At the end of the year we compile a list, some rural roads are built from the state budget, others from the Contingency Fund of the President. We must apply the same approach next year.
Among the infrastructure projects, the priority ones are those on gasification, rural roads, drinking water and, of course, sewage. The laying of power lines must also be a priority. In recent years we have taken serious measures in connection with electricity, generated more power, built power plants. But in many cases distribution lines are not at the desired level. So I think we have to focus on distribution lines, particularly in the regions.
As a result of the measures taken in Baku, we can say that this issue has been fundamentally resolved. The implementation of new infrastructure projects has helped create a very advanced system. But in the regions distribution lines are not up to par.
I also see this, some of them have wooden supports. When there is wind, these supports collapse, the line is broken and people are in trouble. I have repeatedly expressed my thoughts about this. I think that next year should see a watershed in this area. We need to take comprehensive action on this issue. I instruct the government to make a specific program. The investment program should also separately consider the issue of rehabilitation and reconstruction of distribution lines.
We are also successfully addressing food security issues in Azerbaijan. We have a comprehensive approach to this issue too, the necessary analysis is made. We study our domestic capabilities, the potential of the internal market. The goal is to supply ourselves with local products to the maximum extent possible.
We constantly exchange views on this issue. Relevant instructions have been given and I think that further measures will be taken in this area next year. Staple foods should be fully provided domestically. We are close to that, we have already achieved this with some products and are close to the goal with others.
The new businesses emerging in the regions, processing enterprises, dairy factories, livestock farms, bakeries, poultry farms will enable us to ensure domestic consumption using our own resources in the coming years. This is a social issue, a food security issue and an economic issue leading to income generation. So we pursue a number of goals here. In general, I am pleased with the work in this direction because we have a systematic, not a disorganized approach to this work. We carried out a systematic analysis, we are introducing this area to entrepreneurs through the National Fund on Entrepreneurship Support. This mechanism is also proving effective. This year, the National Fund on Entrepreneurship Support will provide soft loans worth 200 million manats, most of which has already been given. I have directed to increase this amount next year. So next year the Fund should provide soft loans worth 300 million manats. This is an important area, this is investment in the real economy, investment made under state control. But the private sector is also investing. In implementing this program, we encourage the private sector by providing soft loans, expanding their activities and also stimulating domestic production. So this is a very effective and efficient mechanism. So I think we must increase this amount. Especially if we consider that most of the funds accumulating in the fund is made up of the repayment of the loans granted in previous years. So there will be no more need for state budget funds. In a few years we will have funds in the amount of nearly $300, maybe even $500 million.
From year to year, these funds will be in circulation and stimulate business. So for the next two to three years, we must provide budgetary support for this area. In the future, it will operate on its own.
The instructions on the creation of large farms are being fulfilled. Two major projects are already under way – one in Agjabadi District, the other in Beylagan. The total area of two plots is almost 5,000 hectares. This is a new approach, we talked about it many times. I am glad that this issue is already being realized. These farms must have very high yield. They should produce at least 40, maybe 50 quintals of grain, so that in the next three to four years we could meet our needs for grain entirely from our internal resources. The creation of such farms should progress fast.
To achieve this goal, we need to create about 40-50 large farms, which will ensure our complete independence in this area.
There are several reasons. First, we must effectively use our lands. Second, we are implementing major irrigation and land reclamation projects. Of course, tens of thousands of hectares of new land will be put into circulation and the farmers will use them effectively. On the other hand, it means new jobs, local production, economic revival. At the same time, we will protect ourselves from global developments. Countries may experience a drought one year and reduce yield another year. This inevitably affects consumer prices. As a result, our people also face difficulties. The world price of wheat has significantly increased because production in traditional exporting countries has sharply declined, there is a deficit, there was a drought.
This, willy-nilly, leads to higher prices. We also faced this situation several years ago. We had signed contracts according to which we were supposed to import corn and wheat. But they were not fulfilled after some countries banned exports. We must get rid of this dependence too. Just as we reduce dependence in other areas, we have to do it in this area. So the investment program should consider this more broadly. I take the maximum, the ultimate goal is to do it in four to five years, but I think that we have to fully provide ourselves with local products in a shorter period of time.
Next year's budget has already been formed and submitted. Next year's budget will be bigger than this year’s. Budgetary expenditure of nearly 20 billion manats is expected, which is a fairly large amount. A consolidated budget will be even bigger.
The consolidated budget may exceed 30 billion dollars. This is a large figure, which, of course, demonstrates our strength and how important it is for us to resolve the country's problems. We should make effective use of these funds. Our steadily growing state budget is, of course, instrumental in resolving our problems. But at the same time it is a big responsibility. We have to make sure that everything related to this issue is taken into account. In particular, we must prepare the investment program. Unlike previous years, we must adopt the investment program perhaps at the end of this year. Normally we adopt the state investment program at the beginning of each year, around January. The process of reconciliation takes some time and the issue of investments starts towards the end of February. So to save time we have to adopt the investment program by the end of this year.
I want to say a few words about energy security. Azerbaijan has fully ensured its security in this area. One of the wonderful events of recent months is that early gas has been produced from “Umid” field. This is a great indicator. The rate of the gas wells is very high. The first well has very encouraging figures. So “Umid” lives up to its name. The discovery of “Umid” by the State Oil Company of Azerbaijan is a historic event. The State Oil Company has managed to develop this large gas field on its own for the first time in recent years. Gas production is now increasing, it is transported to shore, condensate is produced. According to the recent information from the Oil Company, “Umid” produces a very high quality condensate. This field is very important. It will further strengthen our energy security and our export potential.
Usually when it comes to Azerbaijan’s gas resources, some experts only talk about the Shah Deniz field. Of course, Shah Deniz is our largest field. It has gas reserves of at least 1 trillion 200 billion cubic meters. It is one of the world’s biggest gas fields, perhaps even the biggest. But our gas resources are not limited to Shah Deniz. We should not limit our future export opportunities only to Shah Deniz.
The Umid field has been discovered by the State Oil Company. It has at least 300 billion cubic meters of gas. “Total” and “Gaz de France” have discovered large reserves of gas in the field of Absheron. It also has at least 300 billion cubic meters of gas. While planning our export strategy, we take this factor into account. It is as a result of this that Azerbaijan has initiated the TANAP project. Because we need this gas infrastructure in order to deliver any volumes anywhere in the world. We don’t need small pipelines that serve only the development of a single field. We need large-scale natural gas infrastructure. This is one of the reasons behind the TANAP project.
Another reason is well known to you. There have been discussions about various projects for many years, perhaps a decade.
We see that these discussions are held without a reason, they are endless. People gather, talk, hold conferences, sign documents, but there is nothing in the end. We are not used to working like this. We are used to working specifically. Seeing that these discussions are infinite, we made concrete decisions, put forward our proposals in a short time and all the issues were resolved. There is a great interest in the TANAP project in the world. TANAP will be implemented on the basis of an initiative launched exclusively by Azerbaijan.
So energy security issue are always in our spotlight. We should also take further steps to create renewable energy in Azerbaijan.
A few months ago I attended the opening of a plant producing solar panels in Sumgayit. I think this is a great initiative. The plant should be expanded. At the same time, government agencies should use the opportunities of this plant as appropriate, purchase its products and promote the construction of new stations based on solar panels. Next year we should take more specific and serious steps in this regard.
The minister has provided information about the work ongoing in the transport sector. Work is carried out on each area – restoration of motor roads and railways. It is also very important. We have to ensure the operation of high-speed railways. New railways are built for trains to move at high speed. If we consider that Azerbaijan will become a major transit country in the near future – the construction of the Baku-Tbilisi-Kars railway is nearing completion – our railways should meet high international standards.
The construction of a seaport, new airports, the acquisition of aircraft and ferries – all these issues are resolved. I have already said that the construction of rural roads has taken wide scope.
The transport sector will continue to be a priority issue. The transport network of Baku is improving, extensive creative work is under way in the districts. I am pleased that we are close to resolving this issue completely. In my opening remarks I noted that our non-oil industry grew by 7.7 per cent. It is also evidence of the industrialization ongoing in the country. We must strive to ensure that industrialization is even more rapid. Again, in doing so, we work in two directions. Of course, we need major and powerful industrial enterprises. Because this will increase our non-oil production and help create many jobs. I have repeatedly said this and want to say again that several industrial centers are created in Azerbaijan. Traditionally, these centers should be specialized – Sumgayit, Ganja, the Garadagh district of Baku. Three main industrial centers are emerging.
Of course, there are development programs relating to industry issues in other areas, but the main industrial centers must be in these places. The process of creating new industrial parks is ongoing. We already have initial good results, there are other ideas too. We will create new industrial parks where the functioning of major enterprises will facilitate the successful operation of small and medium-sized companies.
The process of stimulating small and medium businesses is under way – both through the National Fund on Entrepreneurship Support and beyond. At the same time, it is very important to create large enterprises and provide them with state support.
We have a very effective mechanism – our energy independence, huge energy resources. Prices in Azerbaijan are regulated by the state. Thus, in order to stimulate domestic production, energy can be provided to local strategic enterprises on concessional terms. We must pursue a flexible policy on the issue. I believe that the strengthening of domestic production should be a priority. After this is fully accomplished and the desired goal in the industrial sector achieved, our talks with the World Trade Organization will certainly go even faster.
The program on the development of Baku and its suburban settlements is ongoing. It is a very serious and specific program. In terms of time, it is a very short-term program. In two years, we had to resolve all the problems, issues of socioeconomic infrastructure in the suburban settlements of Baku. We are close to that. There is one more year to go.
I am sure that the program will be completed by the end of next year and we will resolve all the infrastructure and social issues in the suburban settlements. This is evidenced by the orders given. Creative work is ingoing in all the settlements. Water and sewage projects are a priority. Then the construction of roads will start. In parallel, there is gasification, construction of schools, hospitals, clinics, job creation. Through the National Fund on Entrepreneurship Support we are implementing projects aimed at the economic development of the suburban settlements of Baku. We took such a short time deliberately in order to resolve this issue soon. The program on the development of Baku and its suburban settlements must be completed by the end of next year.
Due to the development of our city, which residents of Baku can see, great creative and landscaping work is carried out. New parks and recreation areas are set up. A lot is done for the comfort of people. Large parking lots are built, which is a very important issue because many cars park in the streets of Baku. Of course, this is unacceptable. On the other hand, we have to understand that if there are no parking lots, car owners have to park their cars somewhere. So I think that we demonstrate a fair position in this area. Until car parks are built, we may, in a way, turn a blind eye to this issue. But after the car parks are built and put into operation, no cars should park illegally. All the cars must be in the parking lots. We are building large parking lots. Behind the Heydar Aliyev Palace there will be a two-storey parking lot for 4,000 cars. It will be 1 km in length and 150 meters wide. A large car park is under construction under the Azadlig Square. It will have a capacity of 2,000 cars. I have told Hajibala Abutalibov to identify other places in the city. There are many empty areas. Parking lots should be built under them and green and recreation areas above them. So we are very serious about these issues.
In general, all the processes in our country are moving in a positive direction. Azerbaijan is making great strides. The fact that the Second Baku International Humanitarian Forum was held very successfully is a very positive development. In just one year since the first forum. And the outcomes of the second forum confirmed this. We have created a very important platform for a global debate. The Baku discussion platform has brought together the world elite for the second time. This forum will be traditional. The speeches by public figures attending the forum this time, their thoughts were very valuable. Moreover, their participation in this forum significantly enhanced the value of the event. Ten former presidents, 11 Nobel Prize winners, renowned professors, representatives of the world's scientific and cultural elite came to Baku. More than 600 guests arrived.
They represented 62 countries. So this is important both in terms of the content and in terms of the essence. At the same time, they had the opportunity to learn about our country. After the forum concluded its work, trips were organized into regions. Trips were organized to four cities. Guests were flown to Nakhchivan, Lankaran, Ganja and Gabala. This is also a very significant phenomenon. They flew to each city. They have all the infrastructure, hotels, where the guests saw our historical places and got a full impression about Azerbaijan. So it is a great format and I am pleased that the results of the forum were very positive.
Also, we have seen very serious events in the current year and last year, the role and place of Azerbaijan in the world have greatly increased. The Eurovision song contest. We did not initiate to host Eurovision in Baku. The conditions of the contest are such that it is hosted by a winning member. We conducted it on a high level. Perhaps even the highest level. We have demonstrated our culture and realities to the whole of Europe.
We were elected to the UN Security Council. For a country that has been independent for only 20 years this is a historic achievement. We were supported by 155 countries. We joined the Non-Aligned Movement. This was also a correct step from the political standpoint. And it was a great victory for our foreign policy.
It is a historic achievement to become a member of this organization and have a resolution adopted in just one year of membership on the support for the principle of territorial integrity in the Armenian-Azerbaijani Nagorno-Karabakh conflict. And we have only been a member of this organization for one year. But this membership was so active and the attitude towards Azerbaijan was so positive that within just one year 120 countries supported our position. In addition, we have achieved success at the Olympics. We are among the leading sporting nations in the world. And this is a reality. So all these achievements make us happy and upset our enemies.
I am sure that these trends will become even stronger in the coming years. Every victory of ours is a tragedy for Armenia.
Every success is frustration for them. We will have many more successes. But our biggest success will be when the Azerbaijani flag will fly in Shusha and Khankandi. I am sure of that, I have no doubt about that. Each one of us, every citizen should work hard to bring this historic day closer. Thank you.
