A REVEALING SIX MONTHS

The Azerbaijani economy maintains its high rate of development, as graphically reflected in the reports of the State Statistics Committee for the first half of 2008. For example, in this period the country's gross domestic product, which is the country's main macroeconomic indicator, increased by 16.5 per cent compared with the same period of 2007, while per capita GDP increased by 15.2 per cent, reaching 2,169 manats, or 2,600 dollars.

Only figures

The increase in GDP is also influenced by rising oil prices in the world market. In the first six months of this year, growth in the non-oil sector accounted for 15.6 per cent and growth in the industrial sectors which form the lion's share of GDP accounted for 13.8 per cent. The rate of growth in the agrarian sector, important in terms of food security, reached its highest point for the last few years - 10.7 per cent.

Significant changes have also been observed in the service sector. Cargo transportation increased compared with the relevant period last year by 13.2 per cent, communications services - by 37.3 per cent and the volume of paid services to the population - by 29.5 per cent. The growth in this area is indicative, on the one hand, of production development and, on the other - of the expansion of the population's disposable finance.

In the first six months of this year foreign trade turnover increased by 4.1 times over the same period last year, including exports - by 6.9 times. The state's currency reserves have increased by 80.5 per cent, or by $5.8 billion, since the beginning of this year, exceeding $13 billion.

In this period, the volume of investment in fixed capital from all sources increased by 31.6 per cent.

As for social development, in this period of 2008, the minimum monthly salary and the basic labour pension reached 60 manats. As a result, the wages of people working in the education, health, culture and science sectors increased by 20 per cent, while the needs criterion, which is applied in calculating social aid to needy families, increased to 55 manats.

However, one indicator is a great blot on this favourable economic picture: the level of inflation reached 20 per cent in the six months. We have said and written much about the objective and subjective causes of such a strong growth in this figure. The one thing that is clear today is that it is still impossible to curb the growth in the index of consumer prices. The only thing that can be done is to ease the negative influence of this process on the welfare of rank-and-file citizens.

It must be noted here that the population's monetary income increased in the first six months by 32 per cent, but "it is also true that per capita income increased by 32 per cent. For this reason, we need to take additional measures in order to keep inflation at a normal level," President Ilham Aliyev said in his address to a cabinet meeting on the results of the first half of 2008.

GDP trebles in five years

So, the economic life of Azerbaijan in 2008 can be assessed as "quite successful". However, ahead of the presidential elections in the country scheduled for October, it may be quite expedient to summarize the results and figures achieved over the last five years of Ilham Aliyev's presidency.

Since August 2003, the volume of gross domestic product increased from 3.1 billion in 2003 to 18.5 billion manats in 2008, or an increase in real terms by 2.7 times.

The country's currency reserves increased by 8.8 times - from $1.5 billion to 14 billion by 1 August 2008. The assets of financial institutions, i.e. mainly banks and insurance companies, increased by nine times - from 944 million to 8.5 billion manats, while the population's bank deposits by 8.3 times - from 193 million to 1,603 million manats.

As a result of the implementation of the fiscal policy, which plays an important role in the dynamic development of the economy, over the last five years budget revenues from the non-oil sector increased by 5.3 times, while their contribution to GDP increased from 11 to 18.7 per cent. The number of taxpayers doubled, reaching 184,000 people, while their trade turnover increased by 4.7 times and totalled 16 billion manats.

The total of taxes and duties transferred to the state budget by customs bodies increased by 5.9 times - from 96 to 564 million manats. Our country's integration into the world economic system accelerated and trade relations expanded, while foreign trade turnover increased by 9.9 times, including export by 17.5 times.

The highly dynamic growth in this period can also be observed in figures indicating the social welfare of the population. For example, the average monthly salary increased by 3.3 times - from 75 to 250 manats, the average monthly pension by 3.4 times - from 24 to 80 manats, the population's monetary incomes by 4.1 times - to 9.41 manats, and per capita income by 3.9 times -from 272 to 1,060 manats. The growth in the population's monetary incomes exceeded the level of inflation by 3.5 times.

Over the last five years, the minimum salary in the country increased by 10.9 times - from 5.5 to 60 manats, students' stipends by 10 times, money allowances for officers in the main armed forces by 4.2 times - to 850 manats, the size of the state budget salary fund by 3.9 times - from 191 to 741 million manats, the size of funds channelled into main social allowances by 1.6 times - from 76.2 to 128 million manats.

Support for entrepreneurship and the private sector was prioritized, as its contribution to gross domestic product has reached 84 per cent.

So, the state has now reduced the rate of profit tax from 27 to 22 per cent, exempted financial leasing operations from VAT, extended the term of tax privileges for agriculture and privileges to deduct income tax from interest rates paid on the population's deposits, as well as dividends and interest rates from investment securities.

Improving the infrastructure

Thus, the success of the economic reforms carried out in the country affects almost every sphere of public life. For this reason, the Azerbaijani leadership is paying more and more attention to medium-term and long-term plans for the future, giving "the green light" to major infrastructure projects, initiatives in the sphere of agriculture, information/communication technology, transport and so on.

"Of course, we must be realistic and accept that for many years ahead, the oil, gas and energy sectors will be lead in our economy and this is a normal process. But, as you know, the necessary measures are being taken to develop the non-oil sector and this is our main goal over the next few years," said the President.

It is known that the basis of the implementation of any project in the non-oil and oil sectors is a high quality, modern infrastructure. Today it is just this sphere that clearly dominates the spending of investment funds. First of all, we are talking about the almost "mass" construction of roads and motorways. In Azerbaijan there is almost no region that is not building roads, while the scale in Baku is simply astonishing, not just for local residents, but also for visitors to the capital.

The updating and modernization of the road infrastructure will be an important factor over the next few years, the head of state promised. 'We have wonderful opportunities for tourism. But if there are no roads, no serious investor will put money in this business. At the same time, the construction of roads leads, of course, to industrial growth," Aliyev pointed out.

Another important infrastructure project is in public utilities, specifically, gas, energy and water supply. They should be uninterrupted throughout the whole country, because we have the means to achieve this. According to the President, by the end of this year there will be no districts left in Azerbaijan that do not receive gas. "Thirteen years on, we have managed to resume gas supplies to Naxcivan by exchanging gas with Iran. As a result, we can say that the Naxcivan gasification programme has been totally accomplished. I think that in the near future, every population centre and village in the NAR will be 100 per cent supplied with gas," he promised.

In order to provide Baku with drinking water, the construction of the Oguz-Qabala-Baku pipeline is continuing and work is under way to update the heating system. Apart from such global projects, this time the head of state highlighted another point - the updating of lifts. In principle, the executive authorities and organizations responsible for ensuing a comfortable life in their homes for citizens of the country should have dealt with this problem a long time ago, but… the head of state had to intervene on this issue again and it will now be solved to his direct order and, therefore, the implementation of the order will be monitored at a high level. Thus, we can expect that the numerous complaints from residents about faulty lifts will end.