President Aliyev says economic growth, diversificaiton among Azerbaijan's priorities [UPDATED]

By Azernews

By Akbar Mammadov

President Ilham Aliyev has said that the sustainable development of the economy based on diversification and economic growth accompanied by more jobs are priorities for Azerbaijan.

Aliyev made the remarks during the video conference with Anna Bjerde, World Bank Vice President for Europe and Central Asia, on June 17.

World Bank Regional Director for the South Caucasus Sebastian Molineus, other representatives of the bank, Chairman of Central Bank of Azerbaijan Elman Rustamov and Presidential Aide Natiq Amirov also attended at the meeting initiated by the World Bank.

President said that Azerbaijan has two priorities during the coronavirus pandemic.

“The two main issues we consider for the future are to achieve sustainable development of the economy based on diversification. Second, economic growth must be accompanied by more jobs. Because Azerbaijan is a country with a growing population. We are already more than 10 million. The population is growing. Therefore, we need more jobs for our people. Especially now, with these new technologies, many jobs are no longer on the market. New jobs are emerging. But for these new jobs, our people must have special skills. Therefore, these two main factors are always on our agenda,” Aliyev said.

Aliyev pointed out that the country’s economy has shrunk by 1.7 per cent in the first five months of 2020.

“Yet the encouraging fact is that we have seen an increase in agriculture - more than 3 per cent. Growth in the non-energy industry was 14 per cent”, the president added.

Furthermore, the president said that Azerbaijan is pleased with the level of cooperation with the World Bank.

Touching upon the support of the World Bank to TANAP, the president said that the implementation of the Southern Gas Corridor project was nearing completion, and the country will complete all construction work within a few months.

Aliyev reminded that overall, $3.5 billion dollars had been allocated to the implemented projects. He also added that Azerbaijan has more plans for future: modernization of the country, development of the non-oil and gas sector and continuation of investment in infrastructure.

Regarding the self-employment program, the president highlighted the fact that Azerbaijan appealed to the World Bank in January 2019, and in less than a year, the country already completed all the preparations. 

“The World Bank's participation in the self-employment project will amount to about $100 million. This year, we plan to cover about 15,000 people in this program, and, of course, the additional funding from the World Bank is highly appreciated and welcomed”, he added.

Anne Bjerde expressed her gratitude to Azerbaijan for the contribution to the International Development Association and support for the fund for poor countries. Noting her participation in first stages of the TANAP project, Vice President Bjerde said that this was a true flagship project that shows that World Bank could support something like this and that Azerbaijan and World Bank mastered both credit operations and joint works.

In addition, expressing her satisfaction with Azerbaijan’s rating in the “Doing Business” report, Bjerde underlined that “Doing Business” for economic diversification was also a good indicator of economic development.

In his turn, Aliyev said that Azerbaijan’s position in “Doing Business” was a kind of motivation for the country to focus on very successful areas.

“Therefore, a special commission consisting of members of the government, the administration and the relevant ministries were established. We paid special attention to the areas we were lagging behind. We have made very substantial progress in a short period of time. Of course, this improves the business environment in the country, allowing you to benefit from more investment. Undoubtedly, we are interested in investing in the non-energy sector”, the president added.

Regarding other projects, Aliyev emphasized the importance of mandatory health insurance in addition to the area of self-employment about which there is a state program. He added that the government had planned to start the country program in January, however, because of the coronavirus pandemic, it was postponed to January 2020.

“But we already have several cities covered by the program. Our results are good. Therefore, before the end of the year, I think we will continue to work with you on how to properly structure this system. Because it is new to us. One issue is that this is applied to three cities. The second issue is that it will be applied throughout the entire country”, he noted

The president said that one of the seriously concentrated areas is irrigation and water supply.

Aliyev noted that he had set up a special government commission headed by the Deputy Prime Minister to create a roadmap for the country’s future water management systems, and many ministers are members of this commission. 

“Unfortunately, most of the infrastructure has expired. In some areas, we lose 40 or even 50 per cent of our water….Especially last year we had a serious drought. This year as well. You know, such misuse of water is unacceptable. Therefore, the government is working on it”, he added.

Given the fact that the government plans to take the first steps in one or two months, Aliyev called on the World Bank to be the partner of Azerbaijan in terms of financing, control and consulting. “You have a lot of experience in this field. Therefore, I would like to name this area among the issues to be included in our agenda,” he added.

Regarding the cooperation with the World Bank in agriculture, Aliyev noted that Azerbaijan must increase the competitiveness of agriculture and have an understanding of how to advance in this sector. 

“We must not only supply our needs with our own resources but also have more export potential. To do this, we need to be more involved in existing export markets and think about new markets. All this is related to the transport and logistics infrastructure, which is in the final stages of rehabilitation”, the president said.

Aliyev reminded that the country is currently working mainly on the North-South transport corridor.  

“The East-West [project] has already been implemented. Rehabilitation of our railway network from the capital (Baku-red) to the northern and southern borders ... The railway exists, but we need to modernize it due to the new volumes of cargo. Thus, this project is also on our agenda”, he added.

Moreover, President Aliyev expressed his gratitude for the World Bank for its support to the country’s court system.

Noting his participation in the opening of the new court building, the president said that not only buildings but also systems, technologies, generally, all these projects had been implemented with the support of the World Bank.

Furthermore, Aliyev stressed the necessity of the country strategy to manage the post-pandemic crisis, considering that some sectors of the country economy had been seriously damaged.

“Especially in the tourism sector, which showed good results and growth in the last four years. Indeed, Azerbaijan has become an interesting destination on the tourism map. Thus, after the pandemic, we must work hard to revive this sector and make Azerbaijan attractive again for foreign tourists. Because tourism is one of the sectors that creates a freely convertible currency”, the president added.

Aliyev also pointed out that the country needs more freely convertible foreign exchange reserves from non-oil and non-gas exports, and therefore; agriculture, tourism, technology will be the main focused areas.

In his turn, Sebastian Molineux spoke about his intention to continue cooperation with large and small companies in increasing the production capacity and efficiency of modern technologies, as well as to assist in the process of creating a world-class healthcare system in Azerbaijan, strong water resources management, infrastructure strengthening and efficient use of water resources.

Regarding the implemented works and future plans, Aliyev said that Azerbaijan was showing positive results during the pandemic, and this had been possible thanks to a new phase of very serious reforms that have recently begun. 

The president stressed that the main issue here was to reduce the shadow economy and informal employment.

“Mandatory health insurance, in addition to providing a high level of health services, will also help us in the fight against informal employment. That is, those who still operate in the shadows will have to move to the white economy”, he added.

Aliyev reminded that the last year tax and customs authorities collected an additional $600 million in addition to the forecast, “mainly due to the reduction of the shadow economy, and this process continues.”

“In the first five months of this year, tax and customs authorities collected more than 400 million manats more than forecast. This happened at a time when trade relations were seriously damaged” Aliyev noted.

Furthermore, the president said that Azerbaijan’s national currency was stable and this was one of the important factors of macroeconomic stability. Considering the importance of macroeconomic stability, Aliyev emphasized that the government had provided a social and economic package of $2 billion to support hundreds of thousands of people working in the unemployed, low-income and pandemic-affected areas, such as tourism and other areas.

“The number of small entrepreneurs alone is about 600,000”, Aliyev added.

Regarding the state support to people who suffered from the pandemic, the president said that the banking system was also undergoing changes and the licenses of some banks have been cancelled, and all insured deposits of people were provided by the government.

In addition, Aliyev highlighted the fact that the country’s strategy must be very specific in terms of content, and thanks to it Azerbaijan must achieve the goals of sustainable development and reduce dependence on the energy sector.

Regarding the energy sector, the president noted that after the commissioning of the Southern Gas Corridor, Azerbaijan's energy sector would gain more potential.

“As for the health sector, I think the investments we have made in health infrastructure over the last sixteen years have now enabled us to fight the coronavirus because our health system is able to treat more people”, Aliyev said.

Furthermore, touching upon again the water security, the president stressed that this is really an issue of security for the country, and Azerbaijan must work on the institutional framework in order to properly form the structure of the country’s companies and government agencies responsible for this area.

Another issue that Aliyev emphasized was environmental protection. 

“This is especially concerning Baku and the Absheron Peninsula. Oil and gas production in those places for centuries has created very serious difficulties for us. We do a lot of cleaning, but maybe we need more support. This is especially true of support that can be provided in terms of technology and advice. Therefore, in my opinion, one of the areas of our future cooperation may be the implementation of environmental projects in oil-polluted areas in Absheron and Baku”, Aliyev concluded.