Closing speech by President Ilham Aliyev at a meeting of the Cabinet of Ministers on the results of socioeconomic development in the first half of 2010

All the issues on the agenda must be resolved before the end of the year. I want to repeat: we are building our work on the basis of a program and have acted upon it since the beginning of the year. However, new tasks have emerged following the recent introduction of changes to the state budget. Of course, to ensure their speedy implementation, all bodies must work even harder because an additional 1.5 billion manats must be invested in the Azerbaijani economy this year. We need to try to use these resources with the maximum possible effect to achieve that even more is done in Azerbaijan this year.

Some of these resources, as I said, will be channeled into our defense potential, another into economic infrastructure projects, and yet another into improving the living standards of those who have lost shelter in the floods. As you may know, we have experienced a major calamity this year. Floods have practically destroyed large areas, cases of inundation have been spoken about here today. I think the relevant bodies have worked with great skill and professionalism. I personally supervised these issues, reports were coming in on a daily basis and I was personally aware of the situation. I can say that all bodies, state and private, have done a great job, worked day and night to eliminate the consequences of this calamity. I would also like to note that the vast majority of private companies worked free. This is a good example of solidarity.

Of course, the Azerbaijani state has assumed all this work. We have received calls from different countries as people who wanted to help us were offering their assistance. We want to thank all countries and people who have made such initiatives. But I want to indicate that the elimination of consequences of this calamity and subsequent work on the restoration of these places, houses and fortification of dams will be assumed by the Azerbaijani state. We will do this work ourselves.

The rescue service, health workers, educational workers, as well as those dealing with water management issues, construction companies – all of us have worked very effectively. Most importantly, we have prevented loss of human life. People were moved out of the affected areas in good time, were provided with temporary shelter, food, healthcare, i.e. all of us joined this work and achieved the maximum result.

We also know that there have been calamities all over the world this year – in Europe, America, Asia, all regions. These developments, accompanied with heavy human loss, have, of course, shocked the whole world. We have seen these developments on TV. I can say that it is a great achievement for us that we have done all this work without any losses. Therefore, I think we have found a way out of this situation with minimum losses.

At the same time, the floods have caused immense damage to our economy, people’s property has been destroyed, thousands of houses and hectares of land have been inundated. Today we are already taking additional measures to improve the situation. Specific plans have been drawn up. First of all, we need to restore the destroyed houses in a short period of time. The Azerbaijani state has assumed to do this work. This is quite rare in the world. In other countries houses are insured and the state is practically not dealing with their restoration or allocating resources. In other words, property owners receive money from insurance companies and restore houses themselves. In Azerbaijan, the restoration of such houses is the responsibility of the state, and we are doing that. The vast majority of the houses were built of low-quality construction materials, which is why they immediately fell apart under pressure from water. We will restore the houses soon using quality materials. We need to try to complete most of the work before winter so that people could move into normal houses.

Besides, we need to resolve all technical issues, strengthen the dams, while all technical facilities must be brought to an operable condition. This is a huge program. In the meetings we held in the aftermath of the calamity, I said that we need to take comprehensive measures. The plan of such measures has been prepared and we will do this work in a short period of time.

In the coming months, in the third quarter, the minimum wage and the minimum pension are to be raised. As you know, we regularly review these issues and raise the minimum wage and pension. I think we need to raise the minimum wage and pension again in the coming months. The Azerbaijani state has the resources, and we must do everything for people, especially those who don’t have extensive resources, to live better every year.

The level of poverty is sharply reducing in Azerbaijan. In the last six years the number of those living in poverty has dropped four times. Despite that, 11 per cent of the country’s population still lives in poverty. The state must take care of these people, provide targeted social assistance and raise the minimum wage and pension, which will be an important social security step.

The construction of all social facilities must be continued. The implementation of infrastructure projects in the area of public health, education, sports and culture will be continued until the end of this year. The resources are available and this work must be sped up. Provisions of loans from the national fund on support for entrepreneurship must be continued faster. It has been mentioned today that certain amounts have already been allocated this year, but the bulk remains undistributed. I think that most of the loans must be provided in the third quarter so that entrepreneurs could use them at least before the end of the year. This program has been under way for several years and has been very effective. The loans are already being repaid, while the repaid amounts are being re-allocated again. Thus, we have already received a large amount. Loans worth over AZN 100 million will be provided this year, while next year this amount may increase further. Most importantly, there must be specific, real and serious projects which could be implemented quickly and in a quality manner.

The Azerbaijani state has identified priority areas for the country’s development and we advise entrepreneurs the areas in which they should use the loans. Namely, as you may know, we oriented entrepreneurs to the construction of refrigerating warehouses and grain storages this year. Modern refrigerating chambers were built in every district over a short period of time. There is still a great need for such chambers. I think we need to use these resources this and next year. The loans work very well, and most of the work under way in the districts in the area of agriculture, processing and tourism is done thanks to them. Therefore, the provision of loans should progress faster.

This year has been declared the Year of Environment in Azerbaijan, and I am very glad that the measures taken in this sphere in the first six months are yielding fruit. Several million trees have already been planted in Azerbaijan this year. A total of 800,000 trees have been planted in Baku and on the Abseron Peninsula alone, and this process will be continued in autumn. Therefore, the task we have set will be achieved.

However, we must take these measures not only in the Year of Environment. This must be a permanent process, and Azerbaijan is taking comprehensive measures to improve the environmental situation. This month we switched to Euro-2 standard. I think this is also a very important event. This is the first step demonstrating the seriousness of our approach to the issue. But this step must be followed by other steps. Euro-2 is not the end objective, it is followed by Euro-3, Euro-4, Euro-5, i.e. all the work must progress in this direction. Transition to Euro-2 is already a very serious step, i.e. the first step.

As you may know, a domestic wastes disposal factory is under construction in Baku. The work under way at the Balaxani landfill has already led to an improvement of the environmental situation. The traditional smoke is no longer billowing from this site. We remember only too well the smoke rising from there covering the whole city and causing serious harm to people’s health. This issue has been resolved. This shows that where there is a serious approach and specific measures, any issue can be resolved. Some thought that the Balaxani landfill will be posing a problem forever, that it is impossible to prevent this major catastrophe, and the wastes accumulating there will be always burning and the smoke enveloping the city. But we have shown that where there is a will, there is a way. Therefore, these measures represent special importance to the improvement of the environmental situation, especially in Baku.

At the same time, the installation of treatment and drinking water facilities, construction of sewage systems must be continued in all districts. This process is always the focus of our attention. Work has started in some districts, in others not. I think we have failed to achieve our goals in this sphere. Azerbaijan has been in talks with international financial organizations for over five years. Five years ago I first raised the sewage and drinking water problems. The Azerbaijani state was ready to allocate the resources necessary and resolve this issue quickly. But the bureaucracy, in some cases the incompetence and red-tape in the talks with international organizations are causing a serious concern. This is the main issue for us because we have progressed much farther in electricity and gas supply issues. The drinking water and sewage issues are still the most difficult for us.

I think we need to take serious measures in this sphere over a short period of time. First steps are already being taken. The suggestion has been made to engage local executive authorities in this work. The Azerbaijani state will allocate resources so that they could do this work themselves. Our plans in this area have not been realized yet. This issue must be resolved without further delay. Drinking water and sewage systems must be established in all district centers and in Baku. Certain work has been done in Baku, but even more remains to do. We must enable citizens throughout Azerbaijan to have drinking water in line with World Health Organization standards.

The Oguz-Qabala-Baku water pipeline is to be commissioned this year. Its construction lasted several years. Of course, there are certain natural reasons for that because this is a new project for us. It was probably difficult to calculate everything beforehand but technical issues which emerged during the construction have led to delays. At the same time, it turned out during the construction that the funds allocated would not be sufficient, i.e. the project became more expensive. We must ensure that the Oguz-Qabala-Baku water pipeline is commissioned in a short period of time and residents of Baku have a better water supply. This is the main goal.

This is a major project representing strategic importance and, at the same time, bearing symbolic nature. We have channeled oil revenues into the construction of a water pipeline. This is a major project which is always the focus of attention. It is necessary to complete the project before the end of the year.

In general, our environmental activities are not confined to these issues. In the last six years, the territory of national parks, reserves and natural areas in Azerbaijan has doubled in size. At present, national parks, reserves and natural areas form 10 per cent of Azerbaijani territory. This is a large amount which shows our attitude towards natural wealth. We must do our best to ensure maximum protection of nature.

I have expressed my views regarding oil and gas production. We are doing well in this area. Besides, new contracts are being signed with foreign partners. This shows that although 16 years have passed since the signing of the Contract of the Century, Azerbaijan is still attractive to foreign investors and the number of companies interested in cooperating with us is growing. Both our traditional partners and new companies are expressing interest. This is a positive phenomenon. On the one hand, this shows that we indeed have vast oil and gas reserves and are still signing contracts, while on the other, it is evidence that foreign investment in our country is securely protected. Azerbaijan has done a lot to protect investment. We are working with foreign partners on the basis of mutual interests. All parties are fulfilling their commitments. The Azerbaijani state has always honored the conditions stipulated under contracts. The same approach is demonstrated by foreign companies.

I think the international cooperation in Azerbaijan’s oil and gas sector can serve as an example. The fair distribution and transparent storage of revenues obtained as a result of international cooperation are already cited as an example internationally. We have achieved the maximum in this area. Azerbaijan is applying the highest standards existing in the world.

At the same time, along with production issues, we need to resolve other issues in this area, namely in the gas sector. This sphere is attracting special interest in the world now. Azerbaijan has established itself as a gas exporter. The number of our partners is growing and our export geography expanding. We must supply additional volumes of gas to existing markets and take extra measures to access new ones. We have vast gas reserves and are using only a minute fraction of them now. Azerbaijan will be a reliable supplier of gas for decades, to be more exact, at least for 100 years.

Besides, we need to take necessary measures at home and these measures are being taken. The process of gasification is under way, as new villages are receiving gas. We have secured gas supply to all district centers and need to increase the number of recipients. The process of construction of new gas lines to villages must be continued. There are good results in the area of expanding the capacity of gas storages. We will continue paying attention to this in the future too.

Work in the energy sector is progressing on schedule. This year we have laid the foundation of three small hydro-power plants. The construction of such stations in Goycay, Agdas and Balakan is part of a new program on the development of renewable energy. While in Balakan recently, I laid the foundation of station Balakan-1. The construction of 10 small power stations is planned in this district alone. The map of all water resources of the country has been prepared, and on its basis we must build small hydro-power plants on all the rivers where possible. This will be a wonderful project from an environmental standpoint, which will also contribute to our energy security. By generating cheap energy, we will certainly economize and export more gas.

This year first steps have been taken to generate solar energy in Azerbaijan. We demonstrated it yesterday when inaugurating a new building of the Central Election Commission. The first solar batteries have been installed in Azerbaijan and the building of the Central Election Commission will have only solar energy supply. I have issued a resolution to promote this wonderful initiative in Azerbaijan. Considering the strategic and long-term nature of this policy, we must probably set up areas for the production of solar batteries in Azerbaijan. Of course, in the early stages such batteries would have to be imported, but we need to start this production in Azerbaijan so that the resources could stay in the country and local companies and businessmen could take advantage of that. I do hope that businessman will be listening to me because the state is paying tremendous attention to this sphere. I think we have started this work on time.

We have both oil and gas. In other words, we are fully ensuring our energy security even without alternative energy and are even taking part in the energy security of other countries. But I think we must embark on the creation of renewable energy. This will strengthen our economic power and be our contribution to a common cause, to the processes unfolding in the world because climate change issues have already become widespread in the world. Azerbaijan is not contributing to a deterioration of climate changes, not causing any problems to the global climate. This will be our contribution. Besides, this means modernity, novelty and environmental standards. Work in this area has begun. I think it must progress fast, especially if we consider that there are sufficient resources in the state budget to speed up this work done. At the same time, we are engaging the private sector in this work.

Perhaps in the near future we will start specific work on the state budget for next year. The first six months are already in the past. We must start thinking about next year’s budget. I do know that the Ministry of Finance is working on that. In general, the Azerbaijani state budget is already sustainable. We must try to provide our budget with taxes and duties and not to inflate transfers from the Oil Fund too much. But these resources are also necessary because they facilitate Azerbaijan’s rapid development.

As I mentioned earlier, our currency reserves are growing. By the end of this year they will increase even more. But we must use them sparingly. We must invest them in the economy in the form of cash, loans and investments, so that these projects could bring national revenues and replenish the state budget. The work done in this sphere deserves commendation. If we hadn’t invested a lot and had listened to certain international consultants by simply accumulating reserves, the Azerbaijani economy could be in a predicament today. We have successfully passed this crisis because jobs have been created in the non-oil sector, local production has expanded and dependence on imports has reduced. We can provide ourselves with food almost fully. If we hadn’t provided loans, implemented infrastructure projects, built roads and power stations, conducted gasification, all this would not exist. We would probably have not 24, but 30 or 28 billion, but the processes in the country would unfold in a negative direction. We could have faced the Dutch disease. But we have chosen our own path, have accumulated resources, our currency reserves, which have increased this year, show that this growth is ongoing. At the same time, we have channeled huge investments in the necessary sectors.

Today Azerbaijan is a comprehensively developing country. Our cities are comfortable and beautiful. Work is under way in every city, social issues are being dealt with. Creative and improvement work is under way. I can say that by investing these resources in the necessary spheres, we have achieved major successes. In the future, the state investment program must be broad. This program is part of the state program covering the 2009-2013 period. In other words, we must resolve our key socioeconomic issues by 2013. This goal has been set.

The state budget for 2011 must, as ever, be investment-oriented. At the same time, the budget must reflect solution of all social issues. I can say that key investment projects in Azerbaijan – power stations, roads, water reservoirs, other infrastructure initiatives – have either been completed or are close to completion. This year we must start the construction of the Tovuzcay water reservoir. This is another gigantic project relating to electric energy supply and regulation of waters. If the Tovuzcay water reservoir had been built earlier, these floods wouldn’t have caused so many problems because the water reservoir could regulate any volume of water. The implementation of this project could take several years. But we must start it this year and complete this work.

I want to indicate that the main emergency infrastructure projects have either been completed or are under way. Therefore, we must carefully and seriously consider where to channel state investment next year to ensure comprehensive development of our country, develop the non-oil sector so that Azerbaijan could be a sustainable economy for many years to come.

I want to reiterate that the most effective and important indicator in six months for me has been the growth of the non-oil sector by 15.3 per cent, which is the result of our economic policy. Of course, other indicators are also very important – inflation, monetary incomes of the population, the GDP, industrial production. The growth of the non-oil sector by 15 per cent is the result of the work done. These results are certainly very inspiring. We should not feel complacent and must always move forward, always be active and work. There is still a lot to be done in the country. We must enable the people of Azerbaijan to live even better, our country to become even stronger and further strengthen its positions. This is the main objective.

The work to be done in the next six months is clear. Our ministries, state bodies are doing their work. I am sure that by the end of the year these positive trends will be continued. Thank you.