Closing speech by Ilham Aliyev at the meeting of Cabinet of Ministers dedicated to results of socioeconomic development of 2017 and objectives for future
10 january 2018, 12:00
I am sure that the country's economy will follow the path of development this year. Many important projects are to be implemented during the year. Of course, we should try to make sure that the macroeconomic situation remains stable in 2018. I have no doubt that this will be the case. Macroeconomic stability is an important factor for any country. In the last months of the past year, the macroeconomic situation stabilized and the level of inflation was low. I am confident that these positive trends will become even stronger in 2018. The rate of the manat is stable. As I have already noted, our positive balance of 6.2 billion dollars is a very important factor for macroeconomic stability.
I should also mention that according to the calculations of the Davos World Economic Forum, Azerbaijan is in 39th place globally and in first place in the CIS in terms of macroeconomic environment. This is the assessment of Davos. Of course, it is quite remarkable that international organizations react very positively to the work we in Azerbaijan are doing in the area of macroeconomic stability, and assess it quite highly.
We should try to increase the revenues of the Oil Fund. In general, our foreign exchange reserves, the foreign exchange reserves of the State Oil Fund are growing every year. Of course, this will allow the opportunity us to allocate funds for future important projects in the country and ensure economic stability of our country. The volume and growth of foreign exchange reserves provide us with economic independence. We are not dependent on any financial structure. We do get loans, however, I should note that we should conduct an even more rigorous policy in relation to loans. I believe that it is necessary to do work aimed at reducing the external debt of the state in the coming years. Our external debt is at an acceptable level today. For the level of external debt, we are one of the leading countries on a global scale in the positive sense. However, I have set the goal and we should try not to increase our external debt from now on. In fact, we should actually reduce it.
The increase of foreign exchange reserves provides us with economic independence. As I have already mentioned, we provide loans ourselves and are not dependent on external lending. Even when the oil price was at a very low level, we did not allow any delays in financing the Southern Gas Corridor, which is of strategic importance for the country, and this project is already coming to an end. So the high level of our foreign exchange reserves strengthens our economic independence. And this, in turn, strengthens our political independence.
Today, Azerbaijan is one of the countries on a global scale conducting an independent policy. There are not too many countries like that. In particular, it is not typical of small countries in terms of population and territory. We are following the path of independence. A free and independent life is above everything for us. Therefore, we need economic potential not only to resolve economic problems. Our economic potential multiplies our political power, strengthens our position in the region, and allows us the opportunity to correctly identify and implement the country's long-term strategy. Our economic strength, of course, has played a major role in financing the Southern Gas Corridor, the Baku-Tbilisi-Ceyhan, the Baku-Tbilisi-Kars, the North-South and other important projects. We also took external loans to implement these strategically important projects. But if our economic situation had not been strong, we could not have received those loans. We remember too well that when we did not have money, there were not many people prepared to give us a loan. There was practically no-one. As soon as we grew stronger in economic terms and the resources of the Oil Fund began to grow, the number of those willing to extend loans to us increased, and we are making this choice today.
In short, the level of our external debt should go down. The budget for this year provides for the repayment of the external debt. The main goal is that we do not borrow externally for projects that are not very important. We should borrow externally for technologically important projects. It is wrong to borrow an external loan for the construction of a building or another project which we can implement at our own expense.
I am sure that investment this year will be at the level of last year. As I have already mentioned, last year investment was made in the amount of 14.6 billion dollars. Of course, it is difficult to give an accurate forecast at the beginning of the year. But we have done some calculations and expect investment of about 15 billion dollars. This figure may increase, and we should try to make it grow. After all, Azerbaijan has turned into a very attractive country for investment on a global scale. Economic stability, foreign exchange reserves, political stability and commercial attractiveness of the important projects carried out in Azerbaijan will help us attract foreign investment.
The development of the non-oil sector is always in the spotlight. I have repeatedly talked about this. Specific steps are being taken. This year, the government will continue to allocate soft loans to entrepreneurs. For this purpose, credit resources of 170 million manats will be provided. It is gratifying that these funds will be issued again thanks to repayment of loans granted earlier. This primarily shows that entrepreneurs receiving loans from the state realize their responsibility and repay loans. On the other hand, this shows that the funds allocated from the state budget to the National Fund for Entrepreneurship Support work. This year, without any outlays from the state budget, entrepreneurs will receive loans of 170 million manats on concessional terms. We will see – if there are more projects, we can actually increase this amount because this is a very important means for the development of entrepreneurship and our regions, and the vast majority of loans are given to the regions, to the real sector of the economy.
Work will continue to be done to create jobs. As I have already noted, last year was very significant in this respect. However, this should become an ongoing process because, unlike certain countries, the population of Azerbaijan is growing. This is a very positive fact, which is also a manifestation of the successful processes in our country. Population growth suggests that the country is developing in the right direction. In other words, the demographic situation in Azerbaijan is very positive. This strengthens our potential and, at the same time, always sets new challenges for us – first of all, the goals related to infrastructure, social infrastructure and job creation. As the population grows, so should the number of schools and kindergartens. To do this, it is necessary to identify new places, expand the road infrastructure and lay new communications – water, gas and electricity lines. This is the sign of demographic growth. This, in turn, requires additional expenses. State budget expenditure on infrastructure is constantly growing.
In my opening remarks, I noted how much work we did last year. Therefore, the creation of new jobs should become an ongoing process. Since 2004, about two million jobs have been created. But look how much the population has grown. Today, the population of Azerbaijan is approaching 10 million. At the last stages of the Soviet period, our population was 7 million or slightly more. Look how much our population has increased in the years of independence. This is our great strength. It multiplies our strength and, at the same time, poses challenges to us. Therefore, steps will be taken this year to create new jobs. The support provided for the economic sphere, for the development of industrial potential and agriculture, and the results achieved give grounds to say that the process of job creation will maintain its high pace this year too.
The creation of public jobs has produced a positive result. We started this work two years ago. This was a need for that because unemployment had started to grow. The global economic and financial recession has affected us, too. To prevent unemployment, we started to create public jobs, and as a result of prompt action, tens of thousands of jobs were created during the year. The need for public jobs is not so great now. When I travel to the regions, I ask questions and am informed that at the present time, when so much support is provided to agriculture, the people, i.e. the farmers, are mostly engaged in agricultural work where they earn more. Therefore, interest in public jobs has diminished. Nevertheless, measures will continue to be taken this year to create public jobs, so that unemployment in Azerbaijan always stays at a low level.
We also expect the successful implementation of the self-employment program we have recently launched. For this, funds for the amount of 35 million manats are envisaged, which will be a great help for almost 7,000 families. The self-employment program has a great future, and we will take additional measures to implement it. This is an important initiative aimed at eliminating unemployment. In addition, the number of those receiving targeted social assistance will not increase, but decrease. Those receiving this assistance will be provided with the funds necessary for business.
This year, new townships and settlements will be built for the IDPs. This year, the number of IDPs to be provided with new apartments will double in comparison with last year. Whereas in 2017 we moved to 12,000 people new apartments and houses, this year we plan to increase this figure to at least 20,000. This figure can be even higher.
The state investment program provides sufficient funds for the implementation of social infrastructure projects. I want to voice some numbers. One hundred and thirty-seven schools of modular type will be built in the regions. Therefore, I believe that after their construction there should be no schools in emergency condition left in the country. Hundreds of schools will be renovated. Twelve schools in the city of Baku will be overhauled. Thus, there should be no schools left without renovated in the city of Baku. We must complete this program as well. Central district hospitals will be commissioned in six cities. Hospitals will be opened in Gazakh, Gobustan, Shamkir, Guba, Naftalan and Goranboy, while the construction of modern hospitals will be continued in Khirdalan, Gabala and Fizuli district. There are is plans to build four Olympic sports centers. Two of them should be commissioned this year.
Tangible steps are being taken to establish industrial estates. The Neftchala industrial estate was commissioned last year. The process of establishing the Hajigabul, Masalli and Sabirabad industrial estates continues.
This year, the opening of the first factories of the Light Industry Park is expected in Mingachevir. Work is progressing fast in the Sumgayit Chemical Industry Park. Four new enterprises were opened and the foundation of three more was laid there at the end of last year. I am sure that their commissioning is planned either for this year or for early next year. Thus, the number of residents of the Sumgayit chemical industry park has reached 15, while the amount of investment already made and the investment to be made will reach 2.7 billion dollars. Just look at the excellent results of this initiative! Investment in the amount of 2.7 billion dollars is a huge figure. Only two or three years ago, everything on the territory of the Sumgayit chemical industry park was in a deplorable state – run down buildings, rusty pipes and infrastructure. The state took on this burden, allocated funds and created the necessary infrastructure. The state undertakes and should undertake this work in other industrial parks as well. Also, the state undertakes work related to agriculture – infrastructure, land reclamation measures, construction of canals, water supply to land plots. I can say that this is also a very rare practice in the world because in many countries entrepreneurs deal with these matters themselves.
I am sure that 2018 will also be significant in terms of industrial development. There are plans to open 10 new carpet factories. Thus, the number of carpet factories should reach 20 by the end of the year. This means thousands of jobs. In particular, these factories employ women. These are wonderful jobs for women who can show their knowledge and talent there, and create financial opportunities for themselves and for our country. Their products create excellent opportunities for our export potential and promoting Azerbaijani carpets in the world. Therefore, we plan to open 10 new factories this year.
I am confident that 2018 will also be successful for the development of agriculture. Last year, growth in agriculture constituted 4.1 per cent. This is a good indicator. We are addressing the problem of food security and developing the technical branch of agriculture, which is traditional for us. I should note that the Davos World Economic Forum has also done calculations related to food security. According to the food security index, Azerbaijan is in 57th place in the world. This is a good indicator. Additional measures will be taken related to food security, in particular, to grain growing, so that we could reduce our dependence on imports and increase the volume of exportable products this year, as was the case last year.
Last year, meetings were held in the regions in relation to cotton-growing, silkworm breeding, hazelnut-growing, tobacco-growing, tea-growing, rice-growing, citrus-growing, and several state programs were adopted. We are witnessing great development in these sectors. The attention being paid to these sectors contributes to the creation of jobs and also increases our export potential. For example, in 2017 a total of 207,000 tons of cotton were collected. In 2016, this figure was at 89,000 tons and in 2015 at 35,000 tons. In other words, in a matter of two years we have increased cotton production almost eight times. About 200,000 people are engaged in cotton-growing work and earn an income.
Sericulture. In 2015, a total of 200 kilograms of cocoons were harvested, in 2016 the figure rose to 70 tons and in 2017 to 245 tons. This serves to improve the social status of cocoon growers. This year, this figure should reach 450-500 tons, and we will restore the glory of sericulture.
Last year, hazelnut plantations were established on 18,000 hectares. Thus, the area of hazelnut plantations has reached 55,000 hectares, and our goal is to bring thee figure to 80,000 hectares. Hazelnut-growing will contribute a lot to the development of agriculture and the expansion of our export capacity. Today, hazelnuts are ranked second among exported agricultural produce. Farmers have received more than 100 million dollars from exports of this product. The export of tomatoes is in the first place. This sector is also of great interest. There is great demand for it. Last year, tomatoes worth 140 million dollars were exported. Considering the fact that new greenhouse complexes are being set up on the area of more than 400 hectares now in our country, we can imagine how much our exports of vegetables will increase. We have long provided ourselves with vegetables.
Attention being paid to tobacco-growing is bearing fruit. If in 2016 only 3,500 tons of tobacco were harvested, this figure reached 5,200 tons last year. Very important measures will be taken this year too: driers will be purchased and additional support will be provided to farmers. We are very close to restoring tobacco-growing and should be able to export tobacco not only in the form of raw materials in the future, but also as finished products, cigarettes.
There is development in other sectors – citrus-growing, tea-growing, rice-growing. Great attention is being paid to livestock breeding. This year, our country will import thousands of head of thoroughbred cattle. I am aware that among more than 40 agricultural estates cattle-breeding agricultural estates occupy an important place. Therefore, I am sure that we will fully provide ourselves with meat and dairy products in the near future.
A total of 160 million manats is envisaged for the acquisition of new agricultural machinery. This mainly includes grain harvesters, cotton harvesters, tractors, trailers and other equipment. Last year, 10,000 units of agricultural machinery were delivered to our country. The state allocates funds, imports machinery and leases it to farmers. In other words, agriculture cannot develop without the support of the state. Everyone should know this. Of course, there must be profitability. Some sectors are profitable, while others exist at the expense of subsidies. This is also the case in developed countries. There, too, there are subsidies, the state supports farmers in order to ensure food security and create jobs. We, too, are following this path. Therefore, if production in a given agricultural sector is not very profitable, this is not a tragedy. We should not make a tragedy out of this. At the initial stage, the government provides support, after which everything will go in the right direction. Just as we see growth in agricultural production now. If the state had not provided support at the right time, there could be no talk of 4.1-percent growth in agriculture today. On the contrary, this sector would probably be experiencing a decline now. Currently, we are also taking land reclamation measures. We are restoring forgotten sectors, including olive-growing. This year, olive orchards will be set up on thousands of hectares. Beekeeping has great potential too. Azerbaijan can take an important place on a global scale in the field of beekeeping and honey production. Relevant instructions have been issued. I am sure there will be good results in 2018.
Last year, we set up four trade representative offices. Numerous export missions were sent to different countries. This also has a positive impact. The results of activities of these trade missions should enable an increase in our exports. The activities of these missions will depend on the volume of exports to these countries or regions. Therefore, this issue should be taken very seriously. The establishment of trade missions aims to increase exports to these countries and regions.
This year, three “ASAN xidmət” centers will start operating in Mingachevir, Imishli and Sheki. Therefore, the number of “ASAN xidmət” centers will reach 15. In addition, I have ordered to begin the construction of “ASAN xidmət” centers in five cities this year. They will probably be commissioned in 2019. Thus, we will have a total of 20 "ASAN xidmət" centers in a year. To date, "ASAN xidmət" centers have received about 20 million applications. "ASAN xidmət" has created a very serious turnaround in the field of public services.
Additional measures will be taken in the field of tourism development this year. In 2016, the number of foreign tourists has increased by 24 per cent. Last year it also increased by 20 per cent, reaching a record level. 2.7 million foreigners visited our country. This is a very positive phenomenon. There are reasons for that. I have repeatedly said this, of course. Visitors to our country are attracted by stability, security, hospitality, modern infrastructure, historical monuments and state support for the tourism industry, as well as the international events and international competitions, I am sure. It is gratifying that tourists spent 70 per cent more money through bank cards last year. The number of tourists has increased by only 20 per cent, but the money they spent by 70 per cent. This is also a very positive fact. Tourism is also a kind of export, as it brings currency to the country.
As I have already noted, important events are expected in connection with the Southern Gas Corridor. The TANAP project is expected for commissioning. In the transport sector, the first phase of the Alat trade seaport is to be completed. I visited the port yesterday, as we marked the opening of the Ro-Ro terminal. It is possible to say that most of the work has been done there. The port is functioning. I am sure that it will be commissioned in the first half of the year. Thus, Azerbaijan will have the largest trade seaport in the Caspian basin. At the initial stage, the port's cargo handling capacity is 15 million tons of cargo and 100,000 containers. In the future, as the demand grows, we can expand the port by 50 or 70 per cent by investing small funds in a short time.
This year will be very important for the operation of the Baku-Tbilisi-Kars railway. It will actually be the first year for the Baku-Tbilisi-Kars railway. I have already mentioned that there is great interest is this railway. Baku-Tbilisi-Kars has already transformed the transport map of Eurasia, and Azerbaijan has contributed to that.
As I noted in my opening speech, all the work connected with the North-South transport corridor on the territory of Azerbaijan has been completed. However, we expect large volumes of cargo to be transported along this road. Therefore, the current railway should be upgraded. In other words, the speed of the railway should be increased. With this aim, we need to do work related to the gradual reconstruction and repairs of the Baku-Yalama and Baku-Astara railways. The investment program for this year envisages repair and reconstruction of the Baku-Yalama railway. We are about to start that. In addition, the issue of relocating the Baku-Astara railway, in particular, the section of it passing near the sea, will be addressed. So it is necessary to prepare a feasibility study. This will be of great importance for tourism, because a significant part of the coast is currently occupied by the railway infrastructure. Also, we will not be able to transport the required volume of cargoes by the existing railway. This is an important project. In order to develop tourism, we have included another project in the state investment program. It is the construction of the Laki-Gabala railway. Thus, a railway line will be extended to the city of Gabala. Gabala today is the second tourist center in Azerbaijan after Baku. Of course, the extension of the railway to Gabala will further accelerate the flow of tourists.
We also plan to build a railway line to the Shahdag ski resort in the coming years. Of course, we need to coordinate this project with the Baku-Yalama railway because in order to reach Shahdag by rail, it must be a high-speed line. At present, the Baku-Yalama railway is not suitable for high-speed trains. The railway to Gusar District along the Baku-Yalama line will be resolved as part of one project. This is part of our plans. Therefore, I want the people of Azerbaijan to know this.
More than 2,000 kilometers of automobile roads should be built this year. This is about twice as much as last year. Roads should be built in at least 600 villages.
In general, I want to say that if these projects are also taken into account, a total of 15,000 kilometers of automobile roads will have been built in Azerbaijan since 2004. This is a very high figure.
In order to carry out gasification in the regions, the State Oil Company will receive about 100 million manat from the state budget this year. I want the public to know that the state takes advantage of its financial opportunities in this area. Of course, the State Oil Company earns itself. However, the state provides support for strategically important social projects, and the level of gasification in Azerbaijan should reach 95 per cent by the end of the year thanks to the money allocated.
I would also like to say a few words about other infrastructure projects. These are projects related to irrigation. Water supply of more than 100,000 hectares of new land should be organized this year. Places have been identified, projects have been practically approved and new canals will be laid. Thus, there will be new opportunities for agriculture.
One of the issues people raise during my trips to the regions is associated with irrigation. All the proposals made by our people are taken into account in the state investment program. Therefore, water will be supplied to at least 100,000 hectares of land this year. These lands were not irrigated before. At least 300 sub-artesian wells will be drilled this year. We drill 300 wells every year. There are plans to drill another 300 this year, maybe even more.
This is the main work to be done. Of course, it is impossible to list all the work on our agenda – it will take a lot of time, but these are the main objectives. We have the technical capacity to ensure the fulfillment of all these tasks. Over the years, we have been working hard on increasing domestic production in Azerbaijan. We have construction materials and financial capabilities. Our state budget has increased by more than 3 billion manats. There is political will. Therefore, the tasks I have outlined are the minimum. This work will be done at a minimum. In principle, the amount of work to be done is even greater. I am confident that 2018 will also be successful for our country.
We will celebrate the centenary of our independence this year. A hundred years ago, a democratic republic was created for the first time in the Muslim world. We are proud of the fact that the Azerbaijani people created it. This demonstrated to the whole world again that we are a great, talented and free people. The establishment and two-year activities of the Azerbaijan Democratic Republic were a historic event. Azerbaijan is one of the countries which not only proclaimed the highest democratic values a hundred years ago, but also ensured their implementation. The present-day independent Azerbaijan is the successor of the Azerbaijan Democratic Republic. We are committed to all the democratic traditions of the Azerbaijani Democratic Republic and continue these traditions. However, it should also be noted that today's Azerbaijan cannot be compared to the Azerbaijan Democratic Republic because there were difficulties at the time and our independence did not allow Azerbaijan to pursue a completely independent policy. There were economic difficulties and loss of land. Our historic city of Erivan was given to Armenia. Therefore, we should analyze the activities of the Azerbaijan Democratic Republic correctly. We should not conceal positive and complex moments. Despite all the difficulties and, of course, the wound that is not healing for us, the transfer of Erivan to Armenia, the Azerbaijani state and people highly appreciate the activities of the Azerbaijan Democratic Republic.
Considering this, I declare 2018 a "Year of the Azerbaijan Democratic Republic" in our country. Numerous events will be held both in the country and abroad during the year. Thank you.