Today, we will discuss the execution of the State program on the socioeconomic development of the regions of Azerbaijan and talk about the work to be done this year.
Despite all the objective difficulties, Azerbaijan's economy continued to develop in 2016 and all of the major objectives were met. The key economic indicators are positive. Agriculture grew by 2.6 per cent and the non-oil industry of our country by 5 per cent. Despite the fact that oil prices fell three- to fourfold in the world, the work we had done in previous years and the deep reforms we carried out last year resulted in this development.
Of course, the economic and financial crisis ongoing in the world has had a negative impact on our work. However, I believe that in comparison with other countries, Azerbaijan managed to come out of this difficult situation with minimal losses. More than 100,000 permanent jobs were created last year. This process has continued since 2004 to the present day.
We have managed to preserve the currency reserves of the Oil Fund. I think that this is also a very significant event because the vast majority of oil-rich countries have spent a part of their foreign exchange reserves. We have tried to keep our foreign exchange reserves and managed to do so, as we will still need them today and tomorrow. In general, it is a factor that strengthens our economic opportunities and our economic independence.
I can say that the work we did in 2016 is also receiving praise from influential international economic organizations of the world. Among them, the Davos World Economic Forum, the world's largest nongovernmental economic structure uniting world leaders and the political and economic elite of the planet, has once again given a positive opinion in its report on Azerbaijan. Azerbaijan has advanced by a further three steps and is now in 37th place globally in terms of competitiveness. According to another indicator, the rate of development among developing countries – these calculations cover about 80 developing countries – Azerbaijan shares the first and second positions. That is the assessment the leading international economic structures are giving to our work.
Of course, we are working not for the sake of rankings, but when such opinions are expressed, it pleases us even more, of course. At the same time, it is some kind of a signal to all financial institutions around the world. Therefore, it hasn’t been a problem for a long time for Azerbaijan to get a credit for any project. In fact, our current policy is not to be too much inclined towards borrowing foreign loans. We should try to continue doing all the work using our own resources because an increase of the foreign debt is not a positive development. We are keeping this figure at a very good level – at about 20 per cent. This is a higher figure compared to previous years. The reason for that is the devaluation of the manat. Prior to that, our foreign debt did not exceed 10 per cent. It is still at an acceptable level today. But we should try not to increase it, but rather reduce it. In order to reduce the external debt, we need to be very careful in borrowing foreign loans. We can seek foreign loans only for projects of strategic importance for our country.
In short, I believe that the overall economic development in 2016should be assessed positively. In particular, the work carried out in the regions has also maintained its momentum. A lot of work was done in the regions last year.
The implementation of state programs on the socioeconomic development of the regions changed their appearance. Today's conference is 14th of this nature. For the past 14 years, we have been giving assessment to the work done, identifying gaps and outlining action plans for the future at the beginning of the year. This year too, remaining faithful to this tradition, we are holding this conference again. Heads of central and local executive authorities and representatives of leading business organizations are present here. The event will be continued after the first part of the conference. I am sure that these debates and discussions will help us develop an opinion on the additional work to be completed this year.
In fact, when preparing regional development programs, we received feedback from the regions. The third state program we are discussing today was adopted in 2014. It was also drawn up on the basis of proposals received from the field and taking into account the strategic direction of our country. The goal of the programs is to resolve all the existing problems and social issues. Our programs are very specific. We set very specific objectives, and I can say that both the first and second programs were successfully exceeded. I am sure that the same fate awaits the third program.
The adoption of the first program in 2004 was a historic event because the steps taken towards the development of our regions, diversification of the economy and projects related to infrastructure have created today's realities. If we hadn’t adopted the program on my initiative at the time, we would not have achieved today's success in the regions, of course. All our regions and all cities have prospered and become prettier. Baku, our major cities such as Ganja and Sumgayit are pleasing to the eye and are an example to the world. All our cities have been landscaped and redeveloped. Major infrastructure projects have been implemented. This has enabled Azerbaijan to develop dynamically today. This has enabled businesses to use these opportunities with great efficiency.
The first phase of our program was more associated with infrastructure projects. This was natural because we had not yet fully provided for our energy security in 2004. Our main oil pipeline, Baku-Tbilisi-Ceyhan, was still under construction at the time. In those years, we were receiving electricity and gas from abroad. Such dependence, of course, did not allow us the opportunity to develop the way we wanted. In other words, our development was hampered by external factors. Will we be able to receive enough energy and gas from abroad and at what price?! Therefore, the first objective was to ensure energy independence. We achieved that in a short time. Since 2004, a total 26 power plants have been built in our country. The total capacity of these plants is 2400 megawatts. Imagine how we would live and develop now if we hadn’t done that!
I should also note that the electrical capacity we have created over the past 13-14 years is about equal to the capacity created in all previous years. Whereas today we have 35 power plants, 26 of them were built within the framework of this program. At that time, gasification in Azerbaijan was at the level of 51 per cent. There was almost natural gas in the regions. Today, the level of gasification in Azerbaijan has increased to 92 per cent.
Since 2004, we have built about 11,000 kilometers of roads. This applies to both highways and inter-city and rural roads. This road infrastructure creates comfort for people. At the same time, it is an important factor for economic development. Where there are no roads, there will be no investment, jobs and development. Therefore, a lot of attention has been paid to the road infrastructure. In addition, a fairly large labor force is involved in road construction. Thus, we have provided these people with employment. A modern road infrastructure has been created and this process continues. We will talk about the work to be done this year. The goal has been set to bring all our roads to a high level regardless of their status – highways, inter-city or rural.
Large-scale land reclamation measures have been taken to encourage agricultural development. We have improved the reclamation of hundreds of thousands of hectares of land and included new irrigated areas into the turnover. Four water reservoirs have been built. Among them, I want to emphasize the largest waters reservoirs of Takhtakorpu and Shamkirchay. Tovuzchay and Goytapa water reservoirs have been constructed. These issues also require major funds, but they are essential because, unfortunately, our water resources are generated outside the country. Therefore, we must make rational use of water and create opportunities, infrastructure and reservoirs in the country in order to have reserves and expand acreage. This area also required huge investment. I think that much of the work in this area has been completed. I will express my thoughts about the upcoming work a little later.
I can say that we implemented major infrastructure projects after the first program. I am very glad that we did it in a short time. I have always tried to do this without wasting any time, because this is necessary for the development of the country and for our future. This infrastructure will serve our people and state for decades to come. This has greatly strengthened our country and made it possible for investors to be able to invest in any sphere. Investment is made only where there is basic infrastructure already. If an investor interested in working finds out that there is no light, gas or water, he will never invest. No investor will want to invest in infrastructure projects. This is the responsibility of the state. We have done that for local and foreign investors.
With regard to the activities of domestic businesses, I can say that a strong and active national entrepreneurial class has emerged in Azerbaijan over these years Azerbaijan. Of course, the government has also provided its support for this area too. I am always in contact with entrepreneurs. We hold meetings, address problems, they are always provided with political and material support, as I well understand that no business can be built without the initial capital. In addition, no businessman or entrepreneur would want to invest in risky places and countries. Therefore, I believe that factors such as security, stability, a great public atmosphere, state and material support of businesses have contributed to the formation of a national class of entrepreneurs.
In recent years, since 2004 to the present time, Azerbaijani entrepreneurs have been granted low-interest loans amounting to about 2 billion manats. These loans have provided great support for the development of the national economy. I must also say that all the preferential loans to be issued by the National Entrepreneurship Development Fund this year will be provided at the expense of the loans issued and repaid in previous years. So the state, as they say, has relieved itself of this burden. That was the goal. Every year we allocated large funds: 200 million, in some cases even 250 million manats which helped us do the work, create jobs and ample business opportunities. The time has come when the state no longer allocates money from the budget. We are doing it with the loans that were repaid earlier.
I think that this, too, was a kind of novelty. I do not know of any other country where the state would provide assistance to business entities in this way. I should also note that many countries are using our experience today and citing us as an example. Therefore, we are successfully implementing infrastructure projects within the framework of a single program. Along with that, we are improving the business environment, paying attention to businesses and, of course, creating the social infrastructure.
I have repeatedly said this and I want to reiterate it today that the goal of our policy is to strengthen the country, enhance our independence and achieve sustainable development. Of course, our goal is to create a better life for the people of Azerbaijan. So we are doing it all for our people to live better. Therefore, the solution of social issues is part of all our programs. Our goal is to increase wages, pensions, social benefits, targeted social assistance, and to create social infrastructure.
As for the social infrastructure, I should note that in recent years, starting from 2004, we have built or renovated more than 3,000 schools. We have built or renovated more than 600 medical institutions. In the districts alone we have built more than 40 Olympic centers, more than 20 museums and over 10 theaters. So the focus has always been on the entire social infrastructure bloc. This process continues. The state investment program for this year also includes fairly large funds for the social infrastructure.
Over these years, we have taken significant steps to diversify the country’s economy. We have created a space industry in Azerbaijan. We have two satellites. This is also an innovation, technology and business. Of course, this is how we treat these issues. If the development of modern technologies, personnel training and the space industry are organized correctly, it is a source of great revenue. We are moving along this path, and I am sure that all of the funds we have invested to produce these satellites and put them into orbit will pay off, because their business opportunities are already quite broad.
Over these years, we have implemented major projects providing for the strategic interests of our country. In The Baku-Tbilisi-Ceyhan oil pipeline was commissioned in 2006 and the Baku-Tbilisi-Erzurum gas pipeline in 2007. Our country and region can’t be imagined without these projects today. Not only do these projects strengthen our country, they also bring benefit to our people. Why did we implement all these infrastructure projects? These projects also benefit all countries of the region, deepen the regional cooperation, strengthen stability in the region and, of course, show Azerbaijan’s leadership in this field. We are implementing projects some people see as a myth without any problems and obstacles and despite the fact that there were many forces trying to create problems for us and prevent these projects. It did not work, because we had shown strong political will and managed to achieve our strategic objectives by judicious and prudent policies.
And today, on the basis of this corridor, we are implementing a new global project – the Southern Gas Corridor. The project is also being implemented successfully. I can say quite honestly that if Azerbaijan had not shown leadership in the implementation of this project again, it would never have been realized. I personally attended nearly 10 international conferences and activities related to this project. During these events, of course, I expressed our position and put forward proposals. In other words, I specifically indicated what needs to be done, not just formally. We decided that we would implement ourselves along with friendly and neighboring countries, and we are doing that. After that, we were joined by those who were conducting these workshops and conferences, which, of course, is quite acceptable. We welcome that. The broader the format of cooperation, the better for us. But I want to say again that the Southern Gas Corridor is being implemented today only thanks to the leadership of Azerbaijan. This can be confirmed by anyone who is familiar with this work. It is no coincidence that the leadership and active role of Azerbaijan in this regard were acknowledged in the final document of the Southern Gas Corridor Advisory Council held in Baku in February last year.
The project, of course, will ensure our long-term interests. The implementation of this project will significantly enhance our financial capabilities. At the same time, Azerbaijan will become an even more important country in terms of regional cooperation and energy security.
In other words, it would be difficult to list all the work we have done in recent years. I am simply highlighting the key moments, because it is our history. Without that we would not be talking about our plans for the future. Azerbaijan is one of the countries that have used oil very rationally and intelligently. I remember some analysts saying in the late 1990s and early 2000s that oil would not bring happiness to Azerbaijan and that it would bring us problems. However, we managed to maximize the use of our natural wealth. We have strengthened the country, created a strong state and have been living as an independent nation for 25 years. We have built cities and created a great life for ourselves. Even more ambitious work will be done in the future. All this work, of course, is a centered on the people of Azerbaijan. Without the people's support, we could not have done this work. Therefore, all our successes are underpinned by the people of Azerbaijan. The support of the people and our public, of course, gives us strength and inspiration.
I should also say that we have done all this work in difficult conditions. You are well aware that campaigns of slander and insults are regularly conducted against us. None of them are affecting us because we know where they come from, who is behind them and what their objectives are. Therefore, we are going our own way and life puts everything in its place. Those who organized these dirty campaigns against us have already been swept away from the political arena. The world already knows Azerbaijan better. The world can see that we are an independent and dignified state. The people of Azerbaijan are a proud people who will never allow anyone to dictate anything to us. We have always maintained our dignity. We must resolve all necessary issues in order to continue to lead our country forward with confidence. A special place among them, of course, belongs to the regional development program. I am sure that all the issues outlined in the program until 2018 will be resolved and additional issues will be included in it.
