CHALLENGE ACCEPTED

Right from the start of oil extraction in Azerbaijan, international institutions have periodically warned the country about its dependence on oil incomes and possible economic collapse in the event of loss of these incomes. Over the last few years, it has been proven that the rational use of the profits from the sale of energy resources is reviving all sectors of the country's economy, thereby creating a buffer in the event of oil incomes declining. It is precisely this principle that forms the basis for Azerbaijan's very own unique economic model, which certainly proves its right to exist, as can be seen from the improving statistics in the country's economy.

As the world economy starts to face new challenges and a sharp drop in oil prices, Azerbaijan does, so to speak, have the opportunity to confirm in practice the advantage of its chosen policy. President Ilham Aliyev noted in his scheduled speech at the conference devoted to the results of the first year of implementing the State Programme for Socio-Economic Development of the Regions in 2014-1018 that "Azerbaijan's successful development would continue".

True independence 

It needs to be mentioned that over the last few months President Ilham Aliyev has made several statements regarding the impact on Azerbaijan of the crisis in the world political and economic arena. His speech at this conference was a scheduled one. Taking into account the public's interest in the disturbing situation in the world, the head of state explained in detail both to the officials and to the citizens what tasks and aims are priority ones today from the point of view of economic development against the backdrop of the negative tendencies in the world. "It is not to be ruled out that in the coming years tension in the region will further increase, since previously unseen threats are emerging. We cannot rule out that even greater trials await us in the future owing to the economic and financial crisis. But we have to get ready for and be prepared for all these challenges," the president noted.

It is precisely Azerbaijan's preparedness to face external negative factors that may be considered one of the main achievements of the economic model that it has implemented. The country confidently withstood the financial crisis that gripped the world in 2008, and, having consolidated its reserve potential even further since then and made non-oil sector development a buttress, it can "look" the new challenges "in the eye" without being afraid. "We have never been in favour of populist statements, never taken steps to please any kind of structure abroad. We have only pursued a pragmatic policy, protected the interests of the Azerbaijani people and managed out country confidently," Ilham Aliyev noted.

So, Azerbaijan's economy has already gained recognition in the world as a diversified economy, which has been proven by statistical data over the last 10 years: since 2004 the country's GDP has grown 3.4-fold, which is a record figure on a world scale. Industrial production has increased 2.7-fold. Over a period of 11 years 180bn dollars have been invested in the economy and foreign currency reserves exceed 50bn dollars.

The most important thing is that Azerbaijan has attained these figures almost entirely without aid from foreign donors. You see, it is well-known that that this type of support does not come free of charge and not just because the loans granted do have to be returned all the same. Any subsidies from abroad are granted in exchange for certain political decisions that frequently go against the country's national interests, causing it to become dependent. You do not have to go far to see an example here.

"Take a look at poverty-stricken, indigent Armenia. Armenia is not even a colony, it is not sufficiently worthy to be a servant. The national dignity has been trampled on by a criminal junta, the most recent events confirm this yet again. Look how they are in such a helpless situation that they cannot even put forward just demands. This country has proved that it cannot exist as an independent state. It can only exist as a colony. There are so many peoples that do not have independence. If Armenia does not reject its dirty politics, then the Armenians will become one of them," I. Aliyev stated in his speech.

But the situation in Armenia today is completely fair retribution for its wild appetites and unrealistic territorial claims which have kept the aggressor from becoming a party to all major regional projects implemented on the initiative and with the involvement of Azerbaijan that are today bringing in profits for the all participating countries. Today the republic's foreign debt is only 8 per cent of GDP, which is considered one of the best indices on a world scale.

"At the present time, Azerbaijan's credit rating, macro-economic situation and currency reserves are creating such a positive picture that we can get any sum on foreign markets, be it 10bn dollars, 20bn dollars or 30bn dollars, but we don't do that since we take a responsible approach to this matter. The sum of foreign debt should always be kept low. We can essentially pay off that debt in a single day since our foreign debt amounts to slightly more than 10 per cent of our foreign currency reserves," President Aliyev stated.

So, such economic independence is naturally the best guarantee of political independence. "No-one can deal with us in a dictatorial manner. Some would like to, but they do not manage it and they will not manage it either," the head of state stressed.

A sensible economy 

Azerbaijan has accumulated sufficient economic and financial baggage to withstand the new crisis. Moreover, this crisis is yet another weighty reason for paying even greater attention to the non-oil sectors of the economy. Today all the conditions are right for intensifying their development: the infrastructure has been almost completely modernised, the rail and road network has been upgraded, financial resources are accessible and so forth.

All this creates a foundation for the precise and timely fulfilment of the state programmes, which essentially form the basis of Azerbaijan's unique economic model.

But the drop in oil prices on world markets will naturally mean that certain amendments will have to be made to Azerbaijan's economic policy in the very near future. It is quite natural that this will have an impact on the level of the country's incomes and the growth in foreign currency reserves. In this case, making sensible savings in our finances is the only correct decision to take.

"Whereas in previous years we sometimes included projects in our investment programme that were not of such high priority, those times have now come to an end. Only priority matters are included in the programme of investments. At the same time, there has to be strict monitoring of expenditure. The state structures and companies should not allow any excess expenditure. In general, wastefulness must not be permitted, either in everyday life, in politics or in resolving economic issues, especially in the circumstances prevailing today. All the countries that are rich in oil, which possess great potential, are cutting their budgets and moreover considerably. Expenditure is being slashed. And this is quite natural," the head of state noted.

The banking and financial sector is also faced with certain tasks. In particular, it now has to maintain the conversion rate of the manat in conditions of tough, negative tendencies on the currency markets of the neighbouring countries that are Azerbaijan's trading partners. "When we carried out monetary reform, the manat was equal to the dollar. After this, as the manat strengthened in value, its value rose to 1.3 dollars. The manat was sort of pegged to the euro. One manat was equal to one euro. Today one manat is worth more than one euro. This is not a very positive factor for our export potential. Therefore, I think that the macro-economic situation will be safeguarded if one manat continues to be worth one euro. At the same time, this will only have a positive effect on people's everyday life, while our exports should not experience any problems since henceforth Azerbaijan's economy should be developing along export lines… The relevant structures, the government and the Central Bank need to pay attention to these issues in order to prevent an excessive rise in the value of the manat," the president stated.

As far as the banks are concerned, they should pay great attention to granting loans to the real sector of the economy. Naturally, this money is regarded as "long-term investments" and for the banks there are many more advantages to making swift returns from the consumer credits that are so popular in Azerbaijan today. But nowadays when local financial institutions already have sufficient capital at their disposal, the time has come for them to invest more actively in the economic processes within the country. This is precisely the primary role of banks in all developed countries.

In this connection, I. Aliyev noted, the main activity of the banking sector should be aimed at setting up new enterprises and job creation.

"The state of Azerbaijan and its government have always upheld the banking sector, while simultaneously offering it financial resources, providing them to it and creating a source of income for it. That is, the banking sector needs to appreciate this properly and be grateful to the state for such great considerateness," the head of state noted. In his view, the banks should make information available on what funds they have at their disposal, how much they amount to, what projects they are involved in and to which districts or the city of Baku they have made finance available.

In short, after this statement we can expect more operations in the sphere of bank loans to small businesses and naturally to projects in the economy's non-oil sector. You see, the ultimate outcome should be the production of top-quality goods and what is most important goods destined for export.

"The major states and countries possessing great industrial potential, contacts and strong influence have grabbed all the available markets. We are also doing that and should continue to do so. The political authorities should support businesses. I have repeatedly spoken about this at meetings with ambassadors working abroad and have instructed them in the following manner: you need to create conditions for Azerbaijani businesses in the countries where you are working so that they can gain access to the markets there for exports." I. Aliyev noted.

In this context, he believes that it would be productive to set up systems of incentives for export-oriented businesses in the form of additional concessions which would encourage entrepreneurs to export their goods. This year attention will naturally be focussed on the country's agrarian sector to a greater extent, taking into account the fact that 2015 has been declared the Year of Agriculture in Azerbaijan. But here the achievements are naturally accompanied by sufficient problems that require an extremely rapid solution. Thus President I. Aliyev has charged the relevant state bodies with sorting out the issues relating to the designated use of current wasteland suitable for agriculture.

"If someone has rented the land and is not using it, this means that such contracts are declared null and void. Let these contracts be concluded with people who work this land. Representatives of the local executive bodies should monitor this," he noted.

The president also expressed his dissatisfaction with the unsatisfactory progress being made in implementing the "agriculture e-surveillance" project. Today, when we have a satellite, it will be difficult to hide something or, on the contrary, to exaggerate and inflate the figures. A stop should be put to that, and this is being done. The decline in the output of certain types of agricultural produce is not only connected with drought, but with an attempt to inflate prices. Why? Owing to subsidies.

Surely those present here are aware of the abuse of subsidies that has taken place? They are well aware of it, and some have even been involved in these abuses. An end should be put to that. The state grants this money to farmers and not to officials," I. Aliyev stressed.

Incidentally, once again the president criticised the officials sufficiently scathingly, having noted that the attitudes of citizens who are officials is of great significance for the successful development of the country. "Officials should not forget that they are working for the people and are the servants of the people. I have repeatedly said that I am the first servant. The president should be the first servant of the people, since the people believe in us, place upon us the responsibility for carrying out this mission and charge us with doing it.

Officials, representatives of the state bodies should be side by side with the people, empathise with their troubles and not allow rudeness and arrogance. Arrogance is observed in a number of cases, the officials sometimes behaving haughtily. Such behaviour should not be permitted," the head of state stated, once again appealing to the officials to conduct productive operations in all sectors.

In short, the task that the government sets to prevent programmes from losing their edge are sufficiently tough and strict: the time has come for better organised and unified work to be done to perpetuate the country's economic successes. As already mentioned, although the crisis is a negative factor, at the same time it is an opportunity to show the world the correctness of our chosen course and the dynamism of our own economic model in any circumstances.