
FOUR YEARS OF PRESIDENCY
For three of which Azerbaijan has been a world leader in the pace of economic growth
Author: Namiq MAYILOV Baku
Azerbaijani President Ilham Aliyev held a cabinet meeting at the end of October on the results of nine months of 2007. The head of state stressed the stable and dynamic development of the economy and pointed at problems and shortcomings at the same time. In doing so, the president reported his four-year work in this post. He holds cabinet meetings every quarter. But October marked the fourth anniversary of Ilham Aliyev's election as president of Azerbaijan, and the development that was spoken about at the meeting is not a matter of nine or even 12 months. This is a permanent and endless process that can be assessed only in comparison.
Azerbaijan maintains its leading position in the world for its main macroeconomic indicators. This fact is emphasized not only by the government, but also by international organizations and partner countries. For example, Austrian Minister of Economy and Labour Martin Bartenstein recently said in Baku: "I have been working as a minister for several years, but I have never visited a country where annual economic growth is 35 per cent," he said. If in 2003 Azerbaijan's GDP grew by 11.2 per cent in comparison with the previous year, in 2005 it accounted for 26.4 per cent and in 2006 - for 34.5 per cent. In nine months of this year, the growth reached 27 per cent, while per capita GDP is about 2,000 manats (about 2,300 dollars). It is expected that according to the results of this year, this indicator will reach 3,500 dollars and 4,500 in 2008. For comparison, we should point out that in 2003, per capita GDP in Azerbaijan totaled only 900 dollars. As we can see, the growth is more than noticeable - 500 per cent (See Diagram 1).
Therefore, the state budget is increasing as well. It has increased eightfold in the last four years. Next year, it will increase tenfold in comparison with 2002 (See Diagram 2). "You can hardly find a state where the state budget has increased tenfold in four years," the president rightly said. At the same time, if in previous years Azerbaijan's budget was mainly socially-oriented, today it is more oriented to investment. More than 3 billion dollars will be allocated from the state budget for the implementation of various investment projects alone. For comparison, we should say that it is about 1 billion dollars more than the whole state budget of Armenia in 2008 and slightly more than the state budget of Georgia. Capital investments from the Azerbaijani state budget are channeled mainly into the implementation of various infrastructure projects, the construction of social facilities - schools and hospitals, as well as the creation of new jobs. Statistics show that since 2003, more than 610,000 jobs have been created in Azerbaijan of which 430,000 are permanent jobs. "Thus, the promises made in 2003 have already been fulfilled. I am sure that thanks to the well-known business climate that was created as a result of the measures that were taken and loans that were allocated, the process of creating new jobs in Azerbaijan will be even more active, and the goal we have set ourselves - the elimination of unemployment - will be achieved," the president pointed out.
The problem of unemployment in Azerbaijan is not as pressing as it used to be. This is also proved by the fact that the country's economy absolutely painlessly reacted to the mass influx of our countrymen after the toughening of migration rules in Russia. Moreover, citizens of other countries are coming to Azerbaijan in search of a job. You can see them in any enterprise, not only in the oil sector as was the case before. Some spheres even experience a lack of specialists and work force.
It must be noted that the socioeconomic policy of the state is totally based on long-term and large-scale programmes that cover almost all spheres of life. This helps watch the development of this or that sphere on the basis of the specific results of programmes. For example, in order to assess the work carried out in the sphere of education, it is enough to note the record number - 1,200 schools built in a short period of time. No less work has been carried out in the health sphere. Over the last few years, dozens of new medical institutions, modern diagnostic centres and other facilities have been built in the regions of the country.
Meanwhile, Azerbaijan is still at war with Armenia and in this situation, it is necessary to pay serious attention to the strengthening of the country's defensive capability. In this regard, the military spending of the Azerbaijani budget will total about 1.2-1.3 billion dollars next year. This equals half of Armenia's state budget in 2008. Moreover, a lot of money is being spent on the establishment of Azerbaijan's own military-industrial complex, and as the Azerbaijani president pointed out, "we will soon see the first military products made in Azerbaijan".
Of course, both the natural reserves of the country and its favourable geographic location at the intersection of major international transport corridors play an irreplaceable role in such quick development. But natural reserves and transit possibilities cannot develop the economy on their own, if they are not managed properly and are simply squandered for momentary gain. For this reason, we cannot discard the projects being implemented by the government, which are designed for many years ahead. These projects are the Contract of the Century, the Baku-Tbilisi-Ceyhan oil pipeline, the development of the Sah Daniz deposit, the construction of the Baku-Tbilisi-Erzurum gas pipeline, the restoration of the Great Silk Road, as well as the project on the Baku-Tbilisi-Ceyhan oil pipeline and many others. Having completed the construction of the Baku-Tbilisi-Ceyhan gas pipeline despite all obstacles, Azerbaijan also secured the implementation of the Sah Daniz gas project and the construction of the Baku-Tbilisi-Erzurum gas pipeline. Azerbaijan is also likely to be involved in the Nabucco gas pipeline the need for which is being stressed in Europe. "Nowadays, the gas factor probably plays a more important role in the world's energy security than oil. And we must be ready for this. According to the latest estimations, the natural gas reserves in Azerbaijan total about 2,000 billion cubic metres. This is enough for at least 150 years. Of course, we will secure gas export to other countries, or to be more precise, we are already doing this," the president said at the cabinet meeting. For the time being, Azerbaijani gas is supplied to Georgia and Turkey. Access to the European market will give Azerbaijan even higher dividends, both economic and political.
For the time being, Azerbaijan is not making as much profit from the sale of natural gas as from oil. However, the country has already secured its demand for gas, and there is no need to spend money on gas import and tolerate the whims of the Russian gas monopolist Gazprom which increased natural gas prices every year. Giving up on the import of Russian gas, Azerbaijan finally proved that it is capable of ensuring its energy security on its own, and not only its own. Without Azerbaijan's help, neighbouring Georgia would have hardly overcome the energy crisis during the sharp deterioration of relations with Russia.
The Azerbaijani population is no longer experiencing restrictions in power supplies. Moreover, if in previous years Azerbaijan imported electricity from neighbouring states, now it exchanges electricity with them depending on seasonal requirements. At present, the country is actively restoring the capabilities of the already existing power stations, is building module power stations and is planning to build wind-powered stations. As a result of all this, Azerbaijan will fully turn into a regional power exporter in the near future.
In recent years, Azerbaijan has totally ensured its financial independence as well. This is proved by the level of Azerbaijan's overall currency reserves. We are talking about the 6.3 billion dollars accumulated in the National Bank and the Oil Fund, which the president said makes it possible to carry out economic reforms more courageously and to avoid possible unpleasant events in the world or an economic crisis. The presence of such reserves allows the government to pursue a more independent economic policy and avoid borrowings from abroad when possible. "Now we do not depend on foreign financial organizations. However, we will continue using the possibilities of international financial organizations because this gives us more opportunities. But even if we give up foreign credits, this will not affect Azerbaijan," the head of state said.
Moreover, Azerbaijan itself is turning into a creditor and investor. If previously our country borrowed money from international donors in order to implement various projects, today Azerbaijan itself is financing even such a major project as the construction of the Georgian section of the Baku-Tbilisi-Kars railway. To this end, 200 million dollars will be allocated to Georgia from the State Oil Fund of Azerbaijan for a period of 25 years with an annual interest rate of 1 per cent. The investment plans of the State Oil Company of Azerbaijan (SOCAR) are also quite impressive. By the end of this year, the company intends to commission an oil terminal in the port of Kilevi on Georgia's Black Sea coast. Next year it is planned to start the construction of an oil refinery in the port of Ceyhan and open representative offices in Sweden and Kazakhstan. The possibility of building an oil refinery in Romania is also being studied. In neighbouring Georgia, SOFAR has started setting up its own chain of petrol stations. Another major deal of SOCAR might be the purchase of a share in Turkey's chemical giant Petkim. It is already known that the Turkish privatization department refused to sell the company to the joint Kazakh-Russian Transсentral Asia Petrochemical Holding Consortium and intends to submit for approval the bid of the Azerbaijani-Turkish-Saudi company SOCAR-Turgaz-Injaz which has taken second place in the tender.
But Azerbaijan's foreign investments are not just limited to the oil and petrochemical sectors. The International Bank of Azerbaijan is planning to open a daughter bank in Kazakhstan. The largest Azerbaijani bank already has "daughters" in Moscow and Tbilisi. Moreover, the IBA will open representative offices in Luxembourg, New York and Dubai. The bank already has representative offices in Frankfurt and London. But this is not everything. Azerbaijani companies have trade representations in various countries, actively invest in Kazakhstan's construction market and according to the plans of Azerbaijani businessmen, the area of their foreign investments will significantly expand.
At the same time, the government is still concerned about some problems that have a negative impact on the social welfare of the population. The president openly announces them and issues instructions to eliminate them. "The level of inflation which causes our concern is 16 per cent, and food products have become 15 per cent more expensive. Of course, this worries us very much and we will try to lower the level of inflation as much as we can," the head of state said at the latest cabinet meeting. Stressing the presence of objective reasons such as the hike in oil prices and expensive import, the president also pointed at a number of subjective factors that affect the prices. Among them he highlighted monopolism and unhealthy competition on the market. However, the head of state said that the government should not put up with such a state of affairs and issued an instruction that all measures should be taken to reduce the inflation to a one-digit figure.
At the same time, we have to point out that along with the hike in prices, the population's incomes are growing as well. If inflation has increased by 16 per cent, per capita money income has increased by 38 per cent. Beginning from 2003, the average monthly salary in Azerbaijan has increased from 77 to 177 new manats. The same situation is observed in the growth of the average pension which is currently 58 manats or 70 dollars. It is planned to increase salaries and pensions next year as well, while the tariffs regulated by the state will not be increased.
This is only the start of it, and having analyzed all pluses and minuses, we can see that these tendency, which is proved by the diagrams, will be preserved in the future as well, especially as from the sale of its oil alone, Azerbaijan will get about 200 billion dollars, according to international organizations. If we take into account that the government already has a clear programme on the development of all spheres for years ahead, there is no doubt that these funds will be effectively used in the future to boost the country's economic strength.
RECOMMEND: