President of Azerbaijan Ilham Aliyev has chaired a meeting on the results of 2019.
The head of state made an opening speech at the meeting.
Speech of President of the Republic of Azerbaijan Ilham Aliyev
- Today we will talk about the results of last year and exchange views on the work to be done.
I can say that, in general, 2019 was a successful year for our country. All the goals we set ourselves at the beginning of the year have been successfully met and the country's sustainable development has been ensured. Thus, great strides have been made in political, economic and social spheres. Azerbaijan lived in stability. Stability is the main condition for the development of any country.
Throughout the year, we observed an increase in tensions in various places around the world. Bloody clashes, wars, public protests, police violence, flagrant violation of human rights, breach of democratic values – all this was observed practically throughout the world. Tensions are growing in Europe, Asia, Latin America, in post-Soviet countries, in our region, in the Middle East, in the world. Azerbaijan is developing as a stable place. The Azerbaijani people are the guarantor of stability in Azerbaijan. The will of the Azerbaijani people is the main guarantor of stability in Azerbaijan. Popular support and a high assessment of our policies inspire us even more and, at the same time, ensure stability in the political and economic spheres in our country. When stability is disrupted, crises and chaos occur in countries, which does them a great deal of harm. We saw this in our own history in the early 1990s. Stability in Azerbaijan was disrupted, the country was gripped by crisis and we suffered heavy losses. But Azerbaijan has been living in the conditions of stability for 26 years now. Over these years, our country has passed a very long development path. I can say that our country has passed a development path equal to a century and has now joined the ranks of strong countries on a global scale.
A summit of the Cooperation Council of Turkic-speaking states has been held in our country, and Azerbaijan has taken over chairmanship in this organization. Our country has also hosted a summit of the Non-Aligned Movement. Within the framework of this summit, by a unanimous decision of 120 member-countries, Azerbaijan assumed chairmanship in this second largest international institution after the UN. I want to emphasize this fact because certain countries that are members of the Non-Aligned Movement do not get along with each other, if I may say so. There are conflicts and disagreements between them. Despite this, all countries supported the candidacy of Azerbaijan. This once again shows the high level of respect and trust in us in the international arena.
The second summit of religious leaders of the world was also held in our country. Religious leaders of 70 countries arrived in Azerbaijan, got acquainted with our realities and praised the work our country has been doing in the interreligious and intercultural sphere.
A session of the UNESCO World Heritage Committee has been held in Azerbaijan. This is also a very reputable event on a global scale. As part of the session, the Palace of Sheki Khans and the central part of Sheki were included in the UNESCO World Heritage List. I believe that this is a very important event because Gobustan, Icherisheher and the Shirvanshahs Palace had been included in this authoritative list earlier. I believe that the inclusion of the Palace of Sheki Khans on this list is a fair decision and yet another great success of ours.
I would also like to draw your attention to another international event – the International Astronautical Congress held in Washington last year. This is the most prestigious event in the field of astronautics. The congress passed the decision to hold the International Congress of Astronautics in 2022 in Azerbaijan. This is also a very important event – both the congress itself and the fact that along with Baku, three other big cities participated in this competition - Rio de Janeiro, Singapore and Delhi. Azerbaijan won this difficult competition. In other words, this is a sign of the great attention being paid to our work and a manifestation of the confidence placed in Azerbaijan as a whole. I must also note that the International Congress of Astronautics was held in the Soviet Union only once – almost 50 years ago, in 1973 – and it was held in Baku. At that time, thanks to the efforts of Heydar Aliyev, it was Baku that was selected to host this congress. After almost 50 years, this congress will once again be held in Baku, the capital city of the already independent Azerbaijan, the city of Baku.
Many important events have occurred on the international plane. I am simply highlighting the main issues. The facts already noted clearly confirm that our international positions are strong enough and were further strengthened last year.
Our military potential has also strengthened. Last year, a large number of weapons, ammunition and military equipment were acquired and produced in Azerbaijan. It is no coincidence that the Azerbaijani army ranks 52nd in the world in terms of its military potential, material and technical infrastructure and combat readiness. The results achieved last year, including the construction and renovation of military camps and provision of new modern hardware, have further increased our military capabilities.
Very positive results were achieved in the economic sphere last year. They testify to the fact that we are pursuing a sound policy. I believe that Azerbaijan successfully met all the goals in the economic sphere in 2019. It would be sufficient to look at the figures to see that 2019 was a successful year for our country in terms of economic development. The World Bank included Azerbaijan in the list of 20 most reforming countries. This is a great achievement, which testifies to the fact that the fundamental reforms our country has carried out are approved by leading international institutions. I can say that, in general, 2019 was a year of deep reforms – political, economic, social, as well as personnel and structural transformation. These reforms will enable our development to be even more successful in the future. This includes economic growth, which will increase even more.
I believe that the results achieved in the economic sphere last year are satisfactory. Thus, the gross domestic product grew by 2.2 percent. This is a good result, especially considering that this growth in the non-oil sector is 3.5 percent. Industrial production has increased by 1.5 percent, while in the non-oil sector industrial production grew by 14 percent. This is a manifestation of the work done in the field of industry in recent years. Industrial production in Azerbaijan has grown both at the expense of public funds and as a result of private sector activity. I am sure that this growth will continue to be sustainable.
Agriculture grew by about 7 percent. This growth was particularly high in crop production – more than 10 percent. This is also the result of the work done. Inflation amounted to only 2.6 percent and cash incomes of the population grew by 7.4 percent. This is evidence of the fact that monetary incomes of the population were ahead of inflation. Thus, real incomes of the population have increased. I believe that this is one of the key issues for any country. Our non-oil exports have increased by 14 percent. This is also a very good result. This growth was due to the attention paid to the activities of the private sector in recent years, the provision of low-interest loans, ongoing reforms related to subsidies and other measures.
Our foreign exchange reserves have increased by $6.4 billion to reach a record high of $51 billion. I should note that Azerbaijan holds first place in the CIS space in terms of foreign exchange reserves per capita. The foreign trade surplus is $6 billion, which is an excellent result. I can say that there is a negative balance in the foreign trade of the vast majority of the countries around the world, but it is positive in our country. This, of course, will contribute to both maintaining the manat rate at a stable level and lead to macroeconomic stability in general. So the results and figures achieved in the economic sphere once again confirm that our policy is carefully thought-out and aimed at the result.
As a result of the reforms carried out by tax and customs authorities, more than 1 billion manats entered the treasury in excess of the plan. This, in turn, allowed us the opportunity to initiate a very large social package for the population, and we did it. I believe that this is the largest social package in the history of modern Azerbaijan and the CIS so far. This is not our first initiative in this area. We remember that when repaying the deposits that were left over from the Soviet era and were in some way frozen, we also returned these deposits on the basis of the principle most acceptable to our citizens and with the most acceptable coefficient, thus becoming first in the CIS in this area as well. The social package implemented last year covered 4.2 million people and the material situation of our people improved. The minimum wage has been doubled, the minimum pension has been increased by 70 percent, some benefits by 50 percent, some have been doubled. In other words, we channeled the additional income received as a result of the reforms carried out last year primarily into the social sphere. I announced this at the beginning of last year and said that all the accumulated additional funds would be spent on the social sphere, which we did. As always, we keep our word. The positive developments taking place in the social sphere and the improving well-being of our citizens remain a priority for us.
Of course, as a result of the successful economic policy, a lot of work was done in relation to social infrastructure. Sixty medical institutions and 84 schools have been built and renovated. Fifty schools are of modular type. They have been built in small and remote villages. This shows that the processes taking place throughout our country stem from the overall development potential.
Infrastructure projects have been implemented. In the field of electricity, the “Shimal-2” power station has been commissioned. The capacity of this station is 400 megawatts. In parallel, as a result of the repair and restoration carried out at the Mingachevir Thermal Power Plant and other operating stations, we have restored about 400 megawatts of lost generating capacity. Thus, we received an additional 800 megawatts of generating capacity last year. Of course, this fully meets our needs. At the same time, we have great export opportunities. We currently have 1,000 megawatts of generating capacity in excess of our needs. If we take into account the measures taken to renew the electricity infrastructure, we can say that very serious work has been done in this direction.
Gas supply in our country has reached 96 percent. A total of 345 sub-artesian wells drilled will improve water supply of hundreds of villages. I must also say that more than 400 sub-artesian wells will be drilled this year. The list already includes the names of villages in all our districts and we will do this as part of the investment program during the year.
As for road construction, major projects will be implemented this year in relation to trunk, intercity, rural and intra-village roads. The construction of a new Baku-Sumgayit-Russian border, Ganja-Georgian border and Astara-Iranian border highways is planned on. Last year, 1,300 kilometers of roads were built. We planned on about a thousand kilometers, but due to additional income, 1,300 kilometers of roads were built during the year using the resources of the President’s Contingency Fund and the state budget.
Infrastructure projects are being implemented as part of the fourth state program on the socioeconomic development of the regions adopted at the beginning of last year. This is a five-year program. The previous three programs have been successfully completed. I am sure that there will be no problem with the implementation of the fourth program either. So I believe that after the completion of the program, all our infrastructure projects, including those related to the social infrastructure, will be implemented.
At the beginning of last year, a strong earthquake occurred in Shamakhi, Agsu and Ismayilli districts. Fortunately, there were no casualties. However, thousands of homes were affected. Visiting the region in the immediate aftermath of the earthquake, I promised that all houses would be rebuilt, repaired and restored before the onset of winter. As always, we have kept our word, all the main consequences of the earthquake have already been eliminated and thousands of houses have been built, repaired and restored. This shows again that people’s problems are in the spotlight.
I said this before and want to say it again: a lot of educational work should be carried out in Azerbaijan in relation to property insurance. People need to know that homes and property must be insured. Considering the big gaps in this area in Azerbaijan, the state took the entire financial burden upon itself. Of course, this required large amounts of money, but let me say again that people’s comfort, well-being and decent living conditions are our priority. But I believe that it is necessary to take very serious steps related to property insurance, including public awareness, this year and in subsequent years. Various activities should be carried out in relation to this issue, to inform people in detail about future steps. I am instructing the government to pay attention to this issue. This will also have a positive impact on the development of our country's insurance sector.
The TANAP gas pipeline was commissioned last year. I consider this a historic achievement because TANAP forms the main part of the Southern Gas Corridor. It was after the TANAP agreement signed in 2012 that the development of the Shah Deniz-2 gas condensate field was sanctioned. If TANAP had not been signed, the development of Shah Deniz-2 would not have begun and we couldn’t have obtained this additional volume of gas today. This could have created major problems. Therefore, the signing of the TANAP agreement, the early commissioning of this gas pipeline and the significant savings are a great historic achievement for us. The remaining fourth project of the South Gas Corridor is also being successfully implemented. The implementation level of the TAP project now exceeds 90 percent. I am sure that we will also celebrate the commissioning of the TAP project at the scheduled time this year.
I want to bring one more issue to your attention. It consists in the fact that all the work done, including our positions in the international arena, the establishment of friendly relations with many countries, the stability and tranquility prevailing in our country – all this has given a powerful impetus to the development of tourism. I have repeatedly said that the development of tourism is not limited only to historical monuments or some issues that attract attention and interest. In today's world, there is no region where there are no problems – in fact, very serious ones. As I have already noted, wars, confrontations, coups, public protests, police violence, violation of human rights – of course, the influx of tourists in countries experiencing all this is in decline.
The stability in Azerbaijan, the strengthening of our international positions and the international events held in our country serve the development of tourism. Last year, the flow of tourists reached a record high – 3,170,000 foreigners visited our country. According to the information provided to me, foreign tourists spent 1.260 billion manats in Azerbaijan through bank cards alone. In general, we must take into account the fact that tourists come mainly from neighboring countries and cash payments prevail there, just as they do here. Calculations show that foreign tourists spent as much as 4.3 billion manats in Azerbaijan. I speak in manats, but this is actually currency. This currency is also a kind of exports. This plays a very important role in our macroeconomic stability. Of course, we earn the main currency from the sale of oil and gas although growth of non-oil exports by 14 percent provides for an influx of currency from this sector as well. Tourism development will continue to be in the spotlight.
Thus, we could spend hours talking about the successes achieved in 2019. I have simply highlighted the issues I consider to be the main ones for citizens of Azerbaijan. I want to say again: we will follow this path of success in 2020. I am sure that 2020 will also be successful for our country.
And now let’s move on to discussions. Last year, we adopted the largest state budget in the history of Azerbaijan. The consolidated budget is close to 30 billion manats, approximately $17.6 billion. Of course, this requires stricter control over budget spending.
Let the minister of finance report on the main parameters of the budget and the work to be done this year.
President Ilham Aliyev: Our external public debt is already at a very low level – at about 17 percent, and it will decrease even more this year. But we have financial capacity to further reduce the external debt in a short time. As I noted, we earned $6.4 billion of additional funds last year alone. This year, the oil price is at around $65. The price of oil in our budget is set at $55. We have envisaged the price of oil in a very conservative manner, i.e. at a low level. Despite this, our budget has reached a record level. Therefore, I am sure that we will have a large influx of additional foreign currency this year. So the debt taken at a relatively high interest rate can be replaced with those with a low interest rate. Also, negotiations may be held with creditors that we will repay the arrears ahead of schedule. I believe that the lower the external public debt, the better. In addition, we borrow foreign loans with great caution today. Loans can be taken only for the implementation of technological projects. In previous years, loans were taken for some kind of construction – road or other. There is no reason for that because this work is not dollar-intensive. Therefore, I am instructing the government again to act with great caution in relation to loans. In fact, we do not need foreign loans. We are lenders ourselves now. A report of the Agency for International Development recognizes Azerbaijan as a donor country. As for additional funds earned by the State Oil Fund, this is a very positive fact, of course. Most of the money has been earned from management. And yet, the strategy of the State Oil Fund should consist in investing money in less risky instruments, because our main goal is to save these funds. Of course, as the amount grows, so do the funds earned. I am sure that the Oil Fund’s revenues from management will grow every year. We will continue to increase our foreign exchange reserves. Even in the most difficult years – 2015, 2016 and 2017 – we managed to preserve and increase our foreign exchange reserves.
Our foreign trade relations are expanding. A 14-percent increase in non-oil exports is directly related to this activity. We have bilateral intergovernmental commissions with many countries. In several countries, we have set up trading houses of Azerbaijan. Deputy Prime Minister Shahin Mustafayev leads many bilateral commissions, including those with neighboring countries – Russia and Iran, as well as our main trading partner – China. Therefore, what should be done in this direction this year? Please report on that. I have instructed the government: the main goal of intergovernmental commissions for us is to explore new opportunities for the activities of local companies in foreign countries in order to export Azerbaijani products to these countries, enable their participation in tenders and, at the same time, allow us the opportunity to implement contracts with many countries in this direction. Please inform us briefly about that in respect of last year.
President Ilham Aliyev: The growing trade with neighboring countries is a very positive fact. Trade with all the neighboring countries has increased. Our trade with Turkey reached $4 billion last year. This is a large increase growth. Trade with Russia has increased by 20-25 percent and with Iran by 30 percent. Trade with Georgia has also increased. We successfully work in both bilateral and multilateral formats, including in the energy and transport fields. I have repeatedly said that no country can become a transit country without cooperating with its neighbors. Despite being a landlocked country, we have become one of the international transport centers today. How? Thanks to a thought-out policy and close relations with neighbors. Therefore, cooperation with neighbors in both bilateral and trilateral formats should be in the spotlight this year. All infrastructure projects should be implemented.
The construction of most of the road to the border with Russia should be completed this year. I am sure that the construction of a new highway from the city of Astara to the Iranian border will be completed. The same applies to the project on expanding the Ganja-Georgian border highway to four lanes. Most of this project should be completed this year. At the same time, I want to note that the new bridge opened on the Russian-Azerbaijani border at the end of last year will not only strengthen trade ties between Russia and Azerbaijan. It is also a part of the North-South transport corridor. Azerbaijan has expressed an interest in the construction of the Astara-Rasht railway and relevant documents have been signed. I am sure that our activities in this direction will be effective this year. In general, I can say that international trade relations are very important for us – both in terms of cooperation and increasing trade and investment. We both receive investments from neighboring states and invest in them ourselves. Investments ultimately bring us great returns.
As I noted, the macroeconomic situation was stable last year. Inflation amounted to only 2.6 percent even though a very large social package was implemented. I have spoken about that. At the same time, large funds were provided for the repayment of problem loans. Despite this, inflation remained very low. This year, additional measures will also be taken to maintain the stability of the macroeconomic situation. During 2019, the Central Bank increased its foreign exchange reserves. I am told that funds in the amount of $630 million were received. In general, the Central Bank has foreign exchange reserves of $6.2 billion. Last year, the functions of the Central Bank were expanded. In general, what is the forecast for inflation this year? What changes are envisaged in the banking sector as a result of additional functions? Please inform us about that briefly.
President Ilham Aliyev: You are saying now that banks have been allocated resources in the amount of 2 billion manats and consumer loans again constitute an advantage. This can become a very dangerous trend. Therefore, we must take measures for the banking sector to be more supportive of the real sector. Therefore, you should look at the mechanism for issuing business loans, so that banks are interested in this. And the Central Bank should exercise control over this. After all, we can’t leave this out of sight. Of course, consumer loans are simpler and more favorable for some banks. But for the country's economy, business loans are more preferable. Therefore, discuss these issues with the Ministry of Economy. Today, approximately 170 million worth of low-interest loans are envisaged through the Ministry of Economy and the Fund on Support for Entrepreneurship. As the discount rate decreases, interest rates provided by private banks will approach the level of low-interest loans. Therefore, there must be coordination in this issue. The banking sector is a very large instrument, i.e. it should support the real sector of the economy. There should be no surprises in the banking sector. There should be very rigorous control over their activities and the provision of loans this year. In particular, there should be a mechanism in respect of doubtful loans so that we can prevent this not after the incident occurs, but before it. The responsibility of the banking sector has also increased because we continued to insure all deposits. And this is one of the unique events on a global scale. A few years ago, we applied this in order to build trust. At present, I believe that confidence in the banking sector is at a high level. The manat rate has been stable for more than three years, the economy is strengthening and the balance of payments is $6 billion. So there is no danger. Therefore, state insurance of savings is a major step which enhances the responsibility of the banking sector. Control should be carried out in order to avoid surprises, and I believe that the new powers granted to the Central Bank can help in resolving this issue.
Elman Rustamov: We will do that, Mr President.
President Ilham Aliyev: In my opening remarks, I already spoke about the work carried out in the social sphere and what is expected to be done this year. Last year, we provided apartments to more than 900 martyr families in excess of the plan, and this year this figure will increase even more. A DOST center has started to operate. Two centers have already been established. Please update us about that. What is the situation with targeted social assistance? Last year, I asked you to increase the number of families receiving these benefits and assistance and review the criteria because in some cases the criteria are very strict. They should be fair. Of course, major reforms have been carried out in the social sphere lately, including the provision of targeted assistance. In previous years, this assistance was provided to people who did not need it for a certain fee. At present, the situation is improving, electronic services are provided, but at the same time, the human factor is very important. Therefore, please inform us about the provision of targeted social assistance this year, as well as the self-employment program. This opportunity benefits many families. But there is world practice, and you have also talked about it. In the world, approximately 50 percent of successful projects are implemented using the provided funds. Therefore, we must make sure that the number and percentage of such successful projects in Azerbaijan is even higher. The World Bank has joined this program on my initiative. What will the World Bank do in this area this year? Please inform us about that.
President Ilham Aliyev: This happened as a result of the fight against informal employment. In other words, these employment agreements were simply legalized. First of all, it shows that we are on the right track, and the policy we are pursuing is bearing fruit. At the same time, thousands, tens of thousands of people work in the shadow economy. Therefore, all agencies should work hard to come out of the shadow economy, and there should be very serious coordination here. I am instructing the Cabinet of Ministers to hold a separate meeting on this issue, and relevant agencies should provide their proposals. Very serious coordination should also be carried out between agencies. Registration of 153,000 employment agreements is a major event. Of course, this contributes to transparency. At the same time, it is very important for pension provision.
The initiative related to paid public jobs was put forward by me when public spending sharply declined. We had to do it because the oil price dropped fourfold, our revenues decreased and our budget shrank, including the investment program. In order to prevent unemployment, tens of thousands of paid jobs had to be created on my initiative. Unfortunately, we were faced with very large violations when implementing this program. Of course, particularly shameful was the theft of these funds by local executive authorities, the collection of bank cards and withdrawal of money from them, or provision of this work to their close ones and relatives. This is an unbearable fact. Those who committed such violations have already been punished, and this work will be continued. This should serve as a lesson for everyone. At the same time, a mechanism should be developed to make such violations completely impossible. Therefore, the Ministry of Labor and Social Protection of the Population was instructed to take over coordination of this work, so that those being hired for paid public jobs are registered by the Ministry of Labor and Social Protection of the Population. There are currently 38,000 people who were provided with such jobs last year. How many are envisaged this year and what is the mechanism for monitoring this?
President Ilham Aliyev: In connection with the self-employment program, the World Bank was invited to join it on our initiative. Of course, the main goal here is not in using the funds of the World Bank, although this is also important. The key goal is to use their experience because the World Bank has implemented similar programs in many countries and has extensive experience in this area. Therefore, we attach great importance to the agreement to be signed. I am sure that after the agreement is signed with the World Bank, a new framework for cooperation in this area will be determined.
The 70-percent increase of targeted social assistance is a very serious growth, and you have already noted that it covers 72,000 families. The main question here, of course, is justice. This help should benefit the families that really need it, the families that are in a difficult financial situation.
More houses should be built this year for martyr families and those disabled in the Karabakh war. I gave you an instruction on this issue. Whereas 934 apartments were provided last year, I think that 1,500 apartments should be provided this year. The Ministry of Finance and the Ministry of Economy should give relevant instructions on this issue. Thus, if we achieve this, and I am sure we will, only 2,000 families will remain in line. We will provide them with houses in the coming years.
I believe that our economic indicators are positive now, especially in the non-oil industry where growth amounted to 14 percent. Agriculture grew by almost 7 percent. Let the Minister of Economy report on forecasts of economic development for this year. The investment program was approved last month and should be implemented without delay. Our non-oil exports grew by 14 percent. This is a large growth. However, there are objective reasons that to some extent impede the growth of non-oil exports. The first of these is population growth. In other words, we consume more domestically. The second factor is the increase in the number of tourists. Whereas if less than 2 million people came here five years ago, now there are more than 3 million visitors. Of course, domestic consumption and domestic demand are growing. Therefore, a long-term strategy for non-oil exports should be developed. Moreover, it should be linked to existing markets and work should be carried out to access promising markets. In general, we now know that the population increases by at least 100,000 people every year. Viewing this as a long-term forecast, we should also determine the volume of domestic demand because if we don’t increase production, non-oil production, then our non-oil exports will not only not increase, but even decrease in the future. Therefore, issues of stimulating the processing industry are on the agenda here. So the Ministry of Economy should work closely with the Ministry of Agriculture because our main non-oil exports consist of agricultural produce. Please inform us about that. The state investment program has already been approved, and its main goal is to ensure economic growth. But at the same time, the state currently acts as the main investor. But we want the private sector to be the main investor in the non-oil sector.
The development of small and medium-sized business is also a priority. We are well aware that the bulk of the gross domestic product in developed countries is provided by small and medium-sized enterprises. In Azerbaijan, we are taking first steps in this direction, and support for small and medium-sized businesses should be at the highest level. Please inform us about these issues.
President Ilham Aliyev: Several goals have been set here in relation to the state investment program. Of course, first of all, it is necessary to complete the started projects because there were many unfinished projects in previous years. We embarked on new projects without finishing earlier ones. Thus, our resources were scattered around and the funds did not allow us the opportunity to carry out projects in the right volume. Therefore, first of all, it is necessary to complete the started projects. As for infrastructure projects, we can say that the key infrastructure projects have been implemented in Azerbaijan. True, in the coming years there is a need for implementing these projects because, I want to repeat, this is dictated by population growth. In countries where the population is not growing, there is no need for new infrastructure projects. Our population is growing, so new schools, kindergartens, hospitals, roads and communications – all this requires constant attention. This is the main task. Another goal is that in parallel with the implementation of infrastructure projects, our investment program should support the real sector of the economy. In particular, it is necessary to analyze the impact of these infrastructure projects on the real sector and update me on that – for example, how positive was the impact of the new infrastructure on the real sector of the economy in a particular district.
Another feature of the State Investment Program is that this process creates new and maintains existing jobs. Last year, 98,000 jobs were created in our country. This is a large number. However, let me say again that the population has increased by 100,000 and will grow by 100,000 people every year. The bigger the population growth, the higher the annual growth in the coming years. Today we see this in countries experiencing rapid population growth. This creates major problems. A growing population is a great advantage, which is natural. At the same time, it is a manifestation of our economic policy and stability in the country. But at the same time, it creates great problems. It is necessary to analyze the problems of countries with rapidly growing population. This is not only a matter for the Ministry of Economy. I believe that the Ministry of Labor and Social Protection of the Population should conduct a serious analysis related to labor resources. The Ministry of Agriculture, other relevant bodies and the Cabinet of Ministers should seriously analyze this issue. We need to know the forecast. We must clearly identify our resources. Our territory, sown areas and natural resources are known. Their change is impossible in the future. Therefore, it is necessary to calculate all this to know what situation we will face in 20 or 30 years.
Let me say again that it is necessary to accurately analyze the experience of countries whose population is growing rapidly. We need to develop a long-term strategy together with international financial institutions. I repeat – we do not need funds today. However, we work closely with international financial institutions because they have extensive experience. They work everywhere in the world. This is not only our problem. True, there is no such problem today. The population must grow. But this will become a problem sometime. Therefore, our economic growth must be consistent with a growing population.
A special role in the development of the real sector of the economy is played by agriculture. I have already noted here that we should pay great attention to agricultural processing in the coming years because our agricultural production is growing. Our traditional sectors are developing and recovering, new agricultural sectors are starting to operate. Agriculture is directly linked to industry. For example, the production of fruits and vegetables increased significantly last year. We must have a sufficient number of processing enterprises. Currently, they are not enough. These processing enterprises do not enable us to process fruits and vegetables in large volumes and export them as finished products. Therefore, juices, compotes, canned food and dried fruits – this entire sector should receive serious support both from the state and the private sector. The private sector is already doing this work, and it should do it at its own expense.
We significantly increased grape production last year. The main reason for this is government support for this sector. Growth amounted to 25 percent, more than 190,000 tons of grapes were harvested. This is the highest figure in recent years, which will have a great impact directly on winemaking, and we are seeing that. Wine is also an exportable product. We cannot sell wine without a market. Therefore, we have carried out work in this direction with some friendly countries. Some countries have quotas, import quotas, and we have got them too. Therefore, Azerbaijani wine is sold in many countries these days, and its volume must increase. I believe that there will be no problems with winemaking markets because there are traditional markets and new markets, for example, such a large market as China. Azerbaijani wines are already exported there.
In recent years, we have increased tobacco production – drying chambers, subsidies and other measures taken at the expense of state support. A large cigarette factory was opened in Azerbaijan last year. So we must meet domestic needs with local production. The existing factory has been reconstructed. This is also a paradox. We are a country producing tobacco, but we also import cigarettes from countries where tobacco does not grow. They buy tobacco from us, process it, produce cigarettes and sell them to us. This must end. This issue is also in the spotlight.
It is possible to say that cocoon breeding was completely lost. In 2015, only 200 kilograms of cocoons were harvested. Last year, we picked 630 tons. The Sheki Ipek factory started to operate. Hundreds of people work there. We need to put in place a thought-out concept related to sericulture. Cotton production reached a record high last year – 294,000 tons. Productivity is 29.4 quintals, or almost 30 quintals. In Soviet times, such productivity was only registered for two or three years. This sector also supports the processing industry. Spinning mills are already operational, but they only process 50 percent of products.
We don’t go further than spinning mills. But we must produce fabric – finished products. Therefore, the Ministry is already implementing a program and an e-agriculture program in connection with these issues. Please report on this issue and in connection with subsidies.
President Ilham Aliyev: I am confident that the reforms carried out in the customs sphere will be continued this year, which will allow us the opportunity to accumulate funds in excess of the plan again and transfer them into our budget. My instructions regarding customs checkpoints are being fulfilled. Try to make sure that all our checkpoints are renovated at the highest level. We once reconstructed all the checkpoints, but time has passed – more than 10 years. Therefore, it is imperative to consider installing new equipment there and providing a more comfortable passage for people and vehicles. In conjunction with the Border Service, awareness work should also be carried out in this area – both among citizens and your employees. In some cases, we receive complaints, some people – both local and foreign – complain of rude treatment and disrespect. This must not be allowed. Every customs checkpoint, every airport is the gateway to our country, and every visitor receives its first impression there. Both Azerbaijani citizens and foreign visitors should pass them very comfortably. Our borders should be closed to criminals and smugglers and open to friends. Therefore, we must work harder to ensure this balance.
The head of state then made a closing speech at the meeting.
Closing speech of President of the Republic of Azerbaijan Ilham Aliyev
In short, the discussions held today summarize the work done last year. At the same time, a clear picture emerges regarding the work to be completed this year. I am sure that this year will also be successful.
I would like to express my attitude to another issue. As you can also see, the prime minister of Armenia has recently been speaking about his country’s “successes” and comparing Armenia to Azerbaijan. According to his conclusion, Armenia is ahead of Azerbaijan in many respects. I want to say right away – and there is no need to prove this – that such a theory is unfounded. Azerbaijan is far ahead of Armenia in all major respects. To confirm this, I simply want to cite a few events and voice some figures.
As you know, Azerbaijan was elected a non-permanent member of the UN Security Council with the support of 155 countries in 2011. This is a high indicator in itself. First of all, because we achieved this high and honorable mission for the first time when our independence was only 20 years old. On the other hand, this was a factor directly testifying to the international authority of Azerbaijan because the absolute majority of the world community believed in us, trusted us and voted for us. I already informed the public about this event quite broadly before. However, there is an issue that is always overlooked – many are unaware of this. The truth is that in 2011 Armenia nominated itself before us. But after we had put forward our candidacy, they gave it a bit of a thought and saw that they would lose to us by 100 percent, so they quietly and cowardly withdrew their candidacy. They knew that we would win with a huge margin in the UN and that they would disgrace themselves. So the events which occurred nine years ago show how different the respect and authority of Armenia and Azerbaijan are in the international arena. Our election to the UN Security Council was a great political and diplomatic victory and, at the same time, a great victory over Armenia.
In 2016, Armenia carried out a military provocation against the peaceful Azerbaijani population, killing several civilians, including children. In response to this, Azerbaijan carried out a successful counter-offensive operation, liberated a part of Aghdara, Fizuli and Jabrayil districts, thousands of hectares of land from the invaders, and the Azerbaijani flag was hoisted on these lands. That was our military victory. Another military victory was secured in 2018. As a result of the successful Nakhchivan operation, a territory of more than 10,000 hectares was freed from the invaders, the Armenian armed forces, several important strategic heights were captured, allowing us the opportunity to exercise full control over Armenia’s strategic communications. This was our second military victory.
Azerbaijan is ranked 52nd in the rating of the most powerful armies in the world, while Armenia is 96th. Azerbaijan occupies 63rd place for the strength of its air force, while Armenia is in 86th place. Azerbaijan is in 67th place for the strength of its navy, while there is no sea in Armenia. Azerbaijan is 32nd place for the strength of its tank troops, and Armenia is in 78th. The source is the Global Firepower 2019 report.
And now let me draw your attention to the key macroeconomic indicators. In 2019, Azerbaijan’s gross domestic product in dollar terms was $47.6 billion and in Armenia only $13 billion. In terms of the purchasing power, Azerbaijan has internal products worth $187 billion and Armenia $33 billion, which is 5.6 times less. The per capita gross domestic product in Azerbaijan is $4,800 and in Armenia $4,500. In terms of its purchasing power, the gross domestic product per capita in Azerbaijan is $18,600 and in Armenia $11,000. Foreign exchange reserves in Azerbaijan amount to $51 billion and in Armenia to $2 billion, or 25 times less. Foreign trade in Azerbaijan is $33.6 billion and in Armenia $7.4 billion, or 4.5 times less. Exports: in Azerbaijan they are $19.6 billion and in Armenia $2.4 billion, or 8.1 times less. The surplus in Azerbaijan is $6 billion and in Armenia there is a negative balance of $2.6 billion. Investments: last year, $13.5 billion was invested in Azerbaijan and $900 million in Armenia, or 15 times less. External public debt: Azerbaijan’s external public debt is $7.9 billion and Armenia’s $6 billion. In Azerbaijan, the external public debt accounts for 17 percent of the gross domestic product and in Armenia for more than 40 percent. Foreign exchange reserves in Azerbaijan exceed the external public debt 6.4 times and Armenia’s external debt is 2.3 times bigger than foreign exchange reserves. External public debt per capita in Azerbaijan is $799 and in Armenia $1,900.
Here is the data on wages and pensions. In December 2019, the average salary in Azerbaijan was 723 manats, or $425, in Armenia $369. In terms of the purchasing power of the average wage, Azerbaijan ranks second in the CIS, while Armenia is ninth.
The minimum pension in Azerbaijan is 200 manats, or $118, in Armenia it is $55. In terms of the minimum pension, Azerbaijan is in second place in the CIS and Armenia is ninth. Azerbaijan is in first place in terms of the purchasing power of the minimum pension, while Armenia is tenth, i.e. last place in the CIS. The average pension in Azerbaijan is 262 manats, or $154, while in Armenia it is $84. Azerbaijan ranks fourth in terms of the average pension in the CIS and Armenia is in eighth place. Azerbaijan is in second place in terms of the purchasing power of the average pension, while Armenia is in last 10th place in the CIS. Poverty rate in Azerbaijan is 4.8 percent and in Armenia 24 percent, or five times higher. In 2019, a total of 934 apartments were provided to the families of martyrs and those disabled in the war in Azerbaijan, and zero in Armenia. In general, 7,590 apartments were provided to people of this category in Azerbaijan. As far as I know, there is no such program in Armenia. Last year alone, 600 cars were provided to people of this category, and zero in Armenia. In total, 6,750 cars were provided to people of this category, and zero in Armenia.
Let’s move on to the global competitiveness report of the Davos World Economic Forum. Here are some figures for 2019. According to the long-term strategy of the government, Azerbaijan ranks 10th and Armenia 59th in the world. In terms of the provision of political stability by the government, Azerbaijan is in 11th place and Armenia in 58th. In terms of the independence of the judiciary, Azerbaijan is in 39th place and Armenia in 67th. In terms of the confidence in the police, Azerbaijan ranks 30th and Armenia 44th. For the quality of roads, Azerbaijan is in 27th place and Armenia in 91st. In terms of the efficiency of railway services, Azerbaijan is in 11th place in the world and Armenia in 67th. In terms of the efficiency of air services, Azerbaijan is in 12th place and Armenia in 67th. For the number of Internet users, i.e. their percentage of the population, Azerbaijan is in 43rd place and Armenia in 77th. According to digital knowledge among the population, Azerbaijan is in 19th place and Armenia in 50th. Azerbaijan is 69th in terms of the gross domestic product and purchasing power parity, while Armenia is in 120th place.
Now to the field of sports. In 2019, Azerbaijan won 775 medals in world and European championships, of which 271 were gold. Armenia won a total of 222 medals, of which 61 were gold. In 2019, Azerbaijan won 28 medals at the second European Games and Armenia won 11. At the European Wrestling Championship held in 2019, Azerbaijan won 13 medals, including four gold, while Armenia won three medals, including one gold.
Moving on to the results in chess, which is an intellectual sport. In 2019, Dinara Huseynova won a gold medal at the European Championship among eight-year-olds. Saadat Bashirli and Yusif Karimli won bronze medals. Ayan Allahverdiyeva became European champion among 14-year-olds. Our women's national team beat Armenia at the European Championships and won bronze medals. At the junior world championship, Aydin Suleymanli became world champion among 14-year-olds. And Teymur Rajabov won the World Cup. Azerbaijan won 18 medals at the Olympic Games in Rio 2016, while Armenia won only four. Azerbaijan finished in 14th place in terms of the total number of medals.
Another important issue is that Azerbaijan is waging a consistent struggle against the glorification of fascism, while Armenia is glorifying the Nazis. A 6-meter monument was erected to the fascist executioner Nzhdeh in the center of Yerevan. This bloody criminal was arrested by SMERSH, sentenced to 25 years, died in prison and was not rehabilitated. A monument was erected in honor of such a person in Yerevan, and the prime minister of Armenia identifies this executioner with Solzhenitsyn and Molotov. Nzhdeh is the author of the notorious saying: he who dies for Germany, dies for Armenia, and he said this during World War II. This expression already reflects his despicable essence. Therefore, Azerbaijan supports justice here too, while Armenia is on the side of evil forces.
Based on an analysis by the reputable news agency News & World Report, a list of the most powerful countries in the world has been compiled. Only 80 countries are included on the list, and Azerbaijan is in 45th place on this list. Armenia is not included there at all. In terms of the pace of economic development, we are in 35th place on a global scale.
Azerbaijan is implementing giant projects of world significance. Among them are the Baku-Novorossiysk, Baku-Supsa and Baku-Tbilisi-Ceyhan oil pipelines, the Baku-Tbilisi-Erzurum and TANAP gas pipelines. The Southern Gas Corridor will be commissioned this year. The Baku-Tbilisi-Kars railway has been commissioned, and cargo traffic along this railway is increasing every year. Baku-Tbilisi-Kars is an integral part of the East-West transport corridor. We have successfully implemented this project with neighboring countries – Turkey and Georgia. With other neighbors, Russia and Iran, we are successfully working on the North-South corridor. It is possible to say that this corridor is functioning. Further steps are simply being taken to make this corridor more efficient. These gigantic energy and transport projects have bypassed Armenia. These are our neighbors. At the same time, with the exception of Russia, they are the neighbors of Armenia. So we have established relations with our neighbors on the basis of friendship, cooperation and sincerity, and this is exactly why we have succeeded in implementing these projects. Armenia, for its part, has been neglecting its neighbors for centuries, trying to grab something from them, to lay claim to their lands, to falsify history, to falsify and appropriate historical monuments. This is the difference.
We have isolated Armenia from these energy and transportation projects and never made a secret of that. A few years ago, I said that we would isolate Armenia from all the important projects being implemented in the region with our participation, and we achieved this – as always, we kept our word. As a result of our efforts, Armenia today is a political, economic, investment, energy and transport impasse. This situation will continue until they leave our lands. So if the Armenian leadership once again tries to compare Armenia to Azerbaijan on the basis of some fictitious data, let it think carefully. Speaking the language of sports, Azerbaijan is in the top division, while Armenia is in the third league, and this difference will gradually increase.
You know, I’ve never compared Azerbaijan to any country before. We are not doing our work to leave anyone behind. We are doing it for the benefit of the Azerbaijani people and state. I had to provide this comparative analysis to you and the Azerbaijani people simply to expose another Armenian lie. In fact, the figures I have cited reflect reality, while those cited by Armenia are yet another myth, yet another lie.
2020 has just begun, and it has begun well. I can say that two projects were signed in Baku a few days ago, an executive agreement with two major investors. This is a very important step aimed at creating renewable energy. Two large power plants will be built – wind and solar. The importance of this event is that the funds will be invested by investors. So it is about confidence in us, support for the long-term development of Azerbaijan. The capacity of the two stations will be 440 megawatts. These will be very large stations, the largest solar and wind power stations in the region. We are creating renewable energy ourselves too – a 50-megawatt station has been built. At present, the design of a 84-megawatt station is drawing to a close, and we will do that. Today, the share of renewable energy in our energy balance is approximately 17-18 percent. According to our long-term strategy, we must bring it to at least 30 percent. I should also say that nine companies participated in the tender. So nine major companies are ready to invest in production of renewable energy in Azerbaijan. Two companies that offered more favorable conditions were selected. But this doesn’t mean that the other companies will be left on the sidelines. We invite them. Let them revise their proposals, make the conditions more acceptable for us, for our country, and please, there is enough room for them in Azerbaijan. Thank God, Azerbaijan is rich in both the sun and the wind and has modern energy infrastructure. Again, according to the Davos report, Azerbaijan ranks second in the world in terms of accessibility of energy. We also have exports, last year we exported energy worth more than $60 million. Therefore, I am confident that the creation of renewable energy will become another priority sector for us. I am instructing the Cabinet of Ministers to consider the proposals of the companies that participated in the tender, invite them, conduct negotiations with them individually, so that they could implement a similar project in Azerbaijan.
In a nutshell, I am sure that Azerbaijan will develop successfully this year. In 2020, Azerbaijan will become an even stronger state. Thank you!
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