The minister of Economic Development Shahin Mustafayev's speech in
the event "Azerbaijan model of economic development"
Dear participants of the conference!
After the restoration of the sovereignty, realization of the state-building and organization of the national economy based on the free market relations became an objective necessity in the Republic of Azerbaijan.
But the first years of the independence was serious trial period for Azerbaijan. So, at the beginning of the 90s collapse of the Soviet Union, breach of existing relations among the enterprises, incompetence of the political administration of that time, the Armenian-Azerbaijan Nagorno-Karabakh conflict, over 1 million countrymen being displaced from their motherlands, Azerbaijan being in the economic, political, information blockade resulted in chaos in socio-economic life of the country.
Economic picture of this state is more clearly reflected in the macroeconomic indicators of those years. On average GDP decreased by 16.5% in the country economy over 1991-1994. Trend of downturn was particularly observed in industry, industrial production volume decreased by 10% in 1991, 37% in 1992, almost 50% in 1993 compared to1985. 2/3 part of production capacity of the country was almost lost.
In 1992 the inflation rate increased by 1012.3%, 4.9 times more compared to the previous year. The inflation rate reached up to 1763.5% - the highest limit, stage of hyperinflation. Foreign trade turnover has decreased by 42% in 1992-1994.
Terms of real money incomes of population decreased 3.3 times, on average money income per capita decreased by 3.6 times in 1991-1995. Wage of the population diminished 5.7 times during the 4 years from 1991.
Only after National Leader Heydar Aliyev's return to the power by virtue of the insistent demand of the people political stability was established, the cease-fire was achieved; large-scale economic reforms began in the country. In virtue of this, the financial situation of the country stabilized, volume of investments attracted to the economy increased year by year, better quality of welfare of people was gained.
Solid foundation of Azerbaijan being integrated into world economic system and country's energy security was maintained in virtue of the signature of "Contract of the Century" with 11 trans-national oil companies representing 8 countries on September 20, 1994.
State Oil Fund was established to manage oil revenues earned by joint exploitation of oil fields with foreign companies enabled by the Decree of the National Leader Heydar Aliyev in 1999 effectively, to direct those resources to the development of priority areas and to the implementation of the projects that of socio-economic importance. At present, the Fund's activities and transparency in this field is highly valued by international organizations.
At the same time large-scaled reforms were taken for transition from planned economic system to liberal market economy in oil sector, as well as other sectors. Thus, as a result of organization of legislation, budget, tax, bank system according to the market economy, implementation of agrarian reforms, privatization of state property, creation of favorable business climate for the development of entrepreneurship foundation of transition to market economy was laid down and entrepreneurship class was formed.
Over 1995-2033 gross domestic product grow by 90,1%, state budget income 3 times, currency reserves of the country 85 times, volume of industrial products by 25,2%, volume of agricultural products by 53,9%, foreign trade turnover 4 times, real average wage of persons engaged in the economy 5,1 times, inflation rate was reduced up to 2-3%.
Gained achievements created a strong basis for the sustainable and dynamic development of the country's economy in the coming years.
Pursuant to the socio-economic policy pursued by the President of the Republic of Azerbaijan Mr. Ilham Aliyev gained successes was further strengthened, macroeconomic stability preserved, economic diversification, development of non-oil sectors and districts accelerated, efficient use of strategic currency reserves ensured, stability of national currency, reliability of the banking system increased, strategy of conservative strategy foreign debt implemented, state support of entrepreneurship enhanced, social welfare of the population improved steadily.
In order to gain these objectives some State Programs on social-economic development of the regions, poverty reduction and sustainable development, reliable food supply of population and other programs were passed and are carried out successfully.
Implementation of complex state support measures in stimulating production of agricultural products, allocation of subsides and tax concession for meeting needs of the population for food by means of local production and expansion export, boosting leasing services influenced development of agrarian sector positively and food security was ensured.
Effective use of existing potential of regions of the country, improvement of the socio-economic situation and maintenance of balanced development of the economy allowed to restoration and expansion of infrastructural areas, creation new production and processing enterprises, education, healthcare, sport- health, cultural facilities. The last 6 years almost 2,000 schools were built, and it is more than 40% of numbers of common schools.
Within the transnational transport projects, as well as in Azerbaijani segment of TRASEKA and Northern-Southern international corridors the measures on construction and reorganization of highways, restoration and improvement of road network in the regions were carried out.
Baku-Novorossiysk, Baku-Supsa, Baku-Tbilisi-Jeyhan oil pipelines, as well as Baku-Tbilisi-Erzurum pipeline was put into service to transport hydrocarbon produced in Azerbaijan to world markets.
Pursuant to the construction of Baku-Tbilisi-Kars new railway implementation of the construction and rehabilitation of railway lines of the Georgia and Turkey, establishment of direct railway connection between Turkey and Azerbaijan will be possible and Black Sea and Caspian countries will connect to Europe's railway network.
Recently, 9 new types of modern power stations have been put into operation, and necessary institutional measures for the expansion of use of alternative and renewable energy sources have been implemented. In general, need for electric power has been fully met, 85% of territory of the country was supplied with gas, and Azerbaijan has become energy exporter from energy importer.
Today, our country is an active participant of the European energy security. Baku declaration on AGRI project signed among Azerbaijan, Georgia, Romania and Hungary is the next important step in this direction.
Complex measures relevant to state programs are carried out in ensuring ecological security.
As a result of durable development of entrepreneurship, improvement of business and investment climate, alluring foreign and domestic investments, dynamic development of non-oil sector the share of private sector in economy of the country became over 80%.
More effective mechanism of financing of entrepreneurs' investment projects by means of state funds simplified businessmen's access opportunities to financial resources.
Attained successes ensured increase of trade, especially export potential of the country, led to expansion of non-oil products export, along with oil products.
The expansion of export markets in the country permanently, increase access to new markets and joining of the country to Generalized System of Preferences (GSP) contributed to an efficient use of the export potential.
So, in 2009, Azerbaijan collaborated with about 140 countries of the world, general trade turnover increased by 2.9 times, export by 4.1 times, import by 1.7 times. The successes were attained in the diversification of export, export of non-oil products was 1.9 times more than oil products.
European Union countries hold special places in foreign trade relations, share of these countries in foreign trade turnover was approximately 40%.
During 2004-2009 the volume of gross domestic products increased by 2.8 times due to created favorable condition, durable and rapid economic development.
Simultaneously, currency reserves to be able to maintain country's economic security was formed. Azerbaijan's currency reserves exceeded 26 billion U.S. dollars, which exceeds external public debt 8 times.
Investments worth over 80 billion dollars were channeled to the economy, half being the share of foreign investments. Azerbaijan, one of the leading countries in CIS and Eastern Europe according to the volume of foreign investment per capita, turned into the country put investment to the foreign countries.
Budget expenses increased by 4.8 times, the average monthly wage by 3 times, income of the population by 3.4 times, the amount of the minimum pension by 3.8 times, minimum wages by 6.3 times over 2004-2009. Poverty level increased by 4.1 times from 44.7% to 11% over last 5 years. Up to now 900 thousand new jobs were created.
Despite recession, global-economic crisis in number of countries, macroeconomic stability, economic growth, poverty reduction and financial well-being of the population increased in Azerbaijan in 2009 as well. Real growth of GDP was 9.3%.
It should be noted that, today the share of Azerbaijan economy was 75% in Southern Caucasus economy.
Azerbaijan's social and economic achievements are highly valued by the international organizations. Azerbaijan was considered the most reformist country for "Doing business - 2009". Our country remained at the same rank according to the "Doing business - 2010".
Azerbaijan is the leader among CIS countries according to the "Global Competitiveness Report" for 2009-2010.
Simultaneously, ratings of the international rating agencies on Azerbaijan improve year by year. "Standard and Poor's" International Rating Agency" upgraded Azerbaijan's rating from "Stable" to "Positive" in 2010. "Fitch Ratings" gave investment rating to our country.
As our head of the state Mr. Ilham Aliyev noted: "We have fully passed to the market economy. Azerbaijan economy is a liberal, independent, stable economy based on own resources, integrating rapidly into the world community".
In order to ensure durable economy of Azerbaijan in the future according to the social-economic development policy determined by the head of the state:
- To maintain macroeconomic stability;
- To continue systematic measures to strengthen energy, food and environmental security of the country;
- At the same time, to ensure priority of the quality of economic growth. For this purpose, dependence on the oil sector will be minimized and innovative economy will be provided, intensive methods will be preferred in the development of agrarian sector and economy will grow on clusters by expanding diversification of the economy.
- To further improve business environment, establish industrial cities, business incubators, strengthen advice and information security, state support of entrepreneurship, foster businesslike relations. These measures s will accelerate development of districts and regions.
In general this policy will lead to develop human capital, to reduce and minimize unemployment and poverty, to further increase financial resources from the state budget allocated to social sectors, to develop social infrastructure, to accelerate living standards of population sustainably.
Thank you for attention!