GOAL ACHIEVED

Azerbaijan has managed to diversify its economy, as is evidenced by the results of the country's socio-economic development in the first quarter. "Our non-oil sector grew by 10 per cent last year and by 8.8 per cent in the first three months of this year. Diversification is our top priority. I think we managed to achieve this as our non-oil sector had already been growing rapidly for a long time," President Ilham Aliyev said at a Cabinet meeting held to discuss the results of the first quarter of 2014. 

It should be noted here that the implementation of oil and gas projects in Azerbaijan is also continuing with success, which allows using revenues derived from them to develop other sectors of the economy. 

Criticism and reprimands received by the BP-Azerbaijan management from President Aliyev over a sharp decline in oil production at the Azeri-Chirag-Guneshli [Azari-Ciraq-Gunasli - ACG] oil fields in 2011-2012 have yielded positive results. Minister of Energy Natiq Aliyev said this in his speech at the Cabinet meeting. Thus, 32.7m tons of crude oil was produced at the ACG oil fields in 2013 versus the outlook of 30.6m tons. The actual output in the first quarter of this year exceeded the outlook by 214 tons. 

Interestingly enough, in addition to the oil and gas sector, attention was also focused this time on the energy industry as a potentially "profitable" area. It is no secret that this industry is developing quite rapidly and the foundation of a new era in the national energy sector has been laid under the "State Programme for the development of the energy sector in Azerbaijan (2005-2015)" and the directive "On additional measures to improve the provision of electric power" signed by President Ilham Aliyev. The commissioning of the modern gas turbine power station Simal, the construction of modular power stations in different regions of the country and the launch of the combined-cycle power plants Sumqayit and Canub over the past five years have increased by almost 30 per cent and updated the generating facilities of Azerbaijan's power grid. Currently this figure has reached 7105 MW which allows producing an average of 24bn kWh and export about 2.1bn kWh of electricity. 

In this context, Minister N.Aliyev emphasized the high importance for the country today of electricity export to Europe, Russia and Iran. For this purpose, in order to strengthen links with the power grids of the neighbouring states: Iran, Russia and Georgia, the Azerenerji joint stock company has built new power facilities in the south, north and west, respectively. A power transmission corridor, Azerbaijan-Georgia-Turkey, has been created making it possible to supply 350 MW to countries of Western Europe as from 2014 and 700 MW as from 2015. In short, we can talk about a new promising and profitable export item capable of replenishing Azerbaijan's budget as early as over the next few years. 

It should be said that despite the success of the oil and gas sector and the economy's so far obvious dependence on revenues from the export of energy resources, the Azerbaijani government has always insisted that the basic guideline in its economic policy is to develop the non-oil sector to a level of complete replacement of the oil sector. For this purpose, in particular, it has provided all-out support for local entrepreneurship, stimulated the revival and development of certain industries, agriculture and other areas and implemented numerous infrastructure projects for many years. "Today, the private sector accounts for the bulk of the country's economy. In the future, the private sector will ensure the development of Azerbaijan's economy," said President Ilham Aliyev. 

According to him, positive reports about economic reforms in Azerbaijan in ratings by the world's leading financial institutions have already formed the opinion about good conditions provided for doing business here. This is also demonstrated by the successful placement of Azerbaijan's first Eurobonds with the demand for these securities far exceeding the offer. "Today we can draw any amount of funds from foreign financial markets and we have already done so recently. We did it in a very limited quantity. But the demand or bids were about four to five times higher than our offer," said I.Aliyev. However, this result does not mean at all that the government intends to continue to increase the level of external debt. According to the president, being in a leading place in the world in terms of this indicator (its external debt accounts for only 8 per cent of GDP) Azerbaijan must firmly hold this position in the future. 

In general, as is known, economic growth tells on the budget of every citizen. Thus, the population's cash incomes increased by 4.5 per cent over the first three months of this year with two per cent inflation. In the first quarter, average wage increased by nearly 7 per cent reaching 430 manats, or 550 dollars. The population's deposits in banks also increased by more than 20 per cent. On the one hand, this is based on social factors showing that now people have got some "extra" money that can be kept in banks. On the other hand, this testifies to their confidence in banks. 

Returning to the development of entrepreneurship and ratings, we note that innovations introduced and expected in this area in the near future may further improve the country's position in international institutions' reports. Thus for example, services provided by ASAN xidmat [state agency for public services] have not only scored huge popularity among Azerbaijani citizens within a very short period (more than 1mn people have used it by now) but it has also evoked real interest among foreign experts and will undoubtedly be reckoned as a significant positive change. In February this year, the Ministry of Taxes and Estonia's certificate centres signed a memorandum of intent for the first time with the use of electronic signatures, Minister of Taxes Fazil Mammadov said. As from May 2013, this enables the Ministry of Taxes to be recognized in international operations using the modern type "Asan imza" mobile ID system, issued by ASAN's centre for certification services and attain unlimited digital integration with other countries. In addition, the "Asan odanis" system (online payment of administrative fines) will minimize citizen-official contacts. 

As is well known, acting as another incentive in this matter are major infrastructure projects being implemented in this country through public investment but with the involvement not only influential foreign companies but also many local contractors and subcontractors. For example, one such project is the new passenger terminal complex ready for operation at Heydar Aliyev International Airport which, according to President Aliyev, will be one of the most beautiful airport complexes throughout the world. In addition, the first phase of the construction of a new international seaport at Alat, the biggest on the Caspian Sea, must be completed during the summer months of this year. "The task has been set to put into operation the first part of the port this summer. In that case, the current seaport will be moved from the town centre and the area will be used for public places. Rail tracks will be removed from there. An eight-lane coastal road and a beautiful park are under construction," the head of state said. 

In brief, the foundation for economic development during the current year has been successfully laid in Azerbaijan. "I believe that our experience and our policy to channel funds into the real sector of the economy, attract investments and implement infrastructure projects are already perceived globally as good practice today," President I.Aliyev said.