Speech of Azerbaijan President Heydar Aliyev at the nation-wide conference, dedicated to the presentation of "State Program on Poverty Reduction and Economic Development" - October 25, 2002

Dear conference participants!

Dear ladies and gentlemen!

I cordially greet you, participants of the nation-wide conference dedicated to discussion of "State Program on Poverty Reduction and Economic Development" and I wish successes to the work of the conference.

Such nation-wide conference dedicated to the reduction of poverty and problems of economic development in Azerbaijan is of great importance. In the result of measures taken after gaining of independence by our country, we succeeded to develop economy of Azerbaijan and to improve living standard of our people. At the same time, the problem of poverty remains a problem to be solved before us. In the course of the last decade the problem of poverty became a global problem. The level of poverty is very high in some countries. The struggle for reduction of poverty is being carried out. The problem of poverty reduction was one of the most topical ones at the conference held by United Nations Organization in Johannesburg. It was decided to reduce to level of poverty twice by 2015.

The reasons of poverty are well-known. There are different reasons in different countries. There are such countries in some continents where the poverty was caused by processes underway in the last period, after World War II and especially in the last decade. If we take the case of our region, in other words the countries of Eastern Europe, the independent states that the parts of former Soviet Union, one can see that reasons of poverty differ from those in other regions, but they are well-known at the same time. The poverty was caused by backwardness of economy stipulating lack of employment and, in consequence, availability of poor means for improvement of living standards of people.

It is well-known that after collapse of Soviet Union the hard social-economic processes were underway in former soviet republics and these processes are still going on. Even in the soviet period, the population of this country was not enjoying the equal conditions. The conditions were different in Republics as well. Speaking generally, the poverty was present. Perhaps, in the light of principle of equal living conditions the poverty was hardly noticed. In general, the poverty was not a topic to be discussed in Soviet Union. In other words, even if the problem was present, it was not recognized.

However, after collapse of Soviet Union and gaining of independence by republics, the processes underway caused naturally, not depending on one`s will, the decline of economy to some extent, and afterwards it resulted in collapse or strong depression of economy in different countries.

These processes were present in our country too and all of us experienced it. However, alongside with processes caused by collapse of Soviet Union, the military aggression of Armenia against Azerbaijan has affected our economy. The conflict, resulted in war has negatively influenced many spheres of our economy. In following years, in 1990-1991s, 1992-1993s, on the one hand, the Armenian-Azerbaijani conflict, the war that resulted in people`s deprivation of their homes, their placing to the status of refugees, deprivation of property and, on the other, the cabinet crisis that was present in Azerbaijan in these years, as well as economic and social crisis, caused the deepening decline of economy from year to another. The crisis reached its peak in 1993-1994. Instead of development, our economy was decaying by 20-25% annually. The inflation reached a very high point. It was natural that people were unemployed because of tie-up of enterprises because of such condition. I would like to remind once again, that all of this and constant increasing of flow of refugees because of war were the main reasons of poverty in our country.

The means for elimination of poverty are well known. We are aware of them too. However, at the same time, international organizations, appropriate institutions, advisory councils, etc., having carried out a thorough analysis, established, on the one hand, the reasons of poverty, and on the other hand, the ways of its elimination. As I mentioned previously, we have defined it in the course of the work carried out. There is nothing new for us. However, the world experience and the works carried out in this sphere by international organizations, financial institutions and appropriate bodies of United Nations Organization help us to define the directions of activity and realization of practical measures for elimination of poverty.

It is well known that our economy discontinued decaying and starting from 1995-1996, it grows annually. The bases of our development are known as well. First of all, this is choice of Azerbaijan to adhere the way of market economy. In fact, this is a new method for us and this way is a difficult and not easy to understand one for many. The majority of people are not accustomed to work under this economic system. Therefore, we faced with many problems. However, implementation of economic reforms was a primordial condition for establishment of market economy. We began to carry out them, we are implementing them successfully and we are going to carry out them further. First of all, implementation of land reforms, granting of land to peasants in Azerbaijan and creation of favorable conditions for them in order of rational use of their lands, render of aid resulted in yield of positive results in agrarian sector.

Realization of program of privatization. The privatization of small and medium enterprises is over and we have already elaborated a program for implementation of privatization in all spheres. All measures implemented in the sphere of privatization gave its results.

The liberalization of the economy was one of the main conditions as well. In the result of all these measures we managed to develop our economy since 1996. Since then the Gross Domestic Product (GDP) grew by 68%. The industrial production increased by 23%, agricultural production - by 39%, foreign trade turnover - as many as 2.2 times. The rate of inflation remained on the level of 2,5% and didn`t step over this indicator. Since 1995, the rate of inflation was almost on zero rate. In the result of this, we could achieve the possibility to improve the living standards of people. The average monthly salary grew as many as 3.6 times in these years. The pensions grew as many as 3.4 times.

Actually, Azerbaijan has 1.3 billion USD worth exchange reserve. However, when we commenced our works in the field of economy we did not have even a dollar. We had nothing. Everything was destroyed. From the very beginning, in 1993-1994s, in relation with realization of economic reforms we set the attraction of foreign investors to the country as the main goal, having carried out successive measures we achieved great results. The basis of it, first of all, consisted of oil strategy of Azerbaijan. September 20, 1994, in "Gulustan" palace, we signed a contract on joint development of "Azeri", "Chirag" and "Gunashli" oil-fields located at the Azerbaijani sector of Caspian Sea with largest western oil companies. The contract was named "Contract of Century". It was reasonable, because it was for the first time not only in Azerbaijan, but in the world, that such a contract was signed. We are implementing the provisions of this Contract successively. You may know that afterwards we have signed many other contracts on development of oil and gas fields and we are implementing them too. All this constitutes the state oil strategy of Azerbaijan. The oil strategy of Azerbaijan aimed at development of natural resources of Azerbaijan - oil and gas - together with large, experienced oil companies of Azerbaijan for the sake of present and future well-being of our people. Because of it we have obtained already very good results.

You may know that the oil is being produced and forwarded to the world market on two directions. We have constructed Baku-Novorossiysk and Baku-Supsa oil pipelines. Both Azerbaijan and oil companies participating in our business take benefit from the exported oil. On this basis, the Oil Fund is established in Azerbaijan. Actually, some 690 mln. USD worth assets is accumulated the in Oil Fund. It is a great treasure of Azerbaijan. Along with economic reforms it ensured the economic development and obtaining of above-mentioned results. The improvement of well-being of our people was ensured. The results achieved consist not only of growing of production, economic development and improvement of well-being of people, speaking in general, the economic situation is completely changed.

For instance, in the result of reforms carried out, the share of private sector in production made 70%, including 50% worth share in industry. 99% of agricultural production falls on the share of private sector. The same result persists in commerce. The approximate share of private sector is 65% in construction. The same indicator is in transport. We are very pleased with such results of economic reforms. All of them resulted in change of economic situation in Azerbaijan. The infrastructure in being developed, development of cities is underway in Azerbaijan. The wide-scale construction works, of course, due to the participation of private sector, are underway in our country. It is pleasant that dwelling houses are being constructed. These buildings are constructed for improvement of living standard and housing conditions of people. This is a great business, we encourage this business in the last years in Azerbaijan.

All of this, as I mentioned previously, are results of our works and figures that I pronounced demonstrate the actual situation in Azerbaijan.

However, along all of this, the poverty exists in Azerbaijan. The elimination of poverty is one of our main goals. The results of survey carried out by international organizations show that some 47% of population is in poverty. Hence, our goal is to strengthen our struggle against poverty, reduce the poverty and eliminate the poverty in Azerbaijan in the future. Therefore, I signed a decree for elaboration of State Program on Poverty Reduction on May, 2001, and a State Committee was established. Prime Minister Artur Rasizade heads the commission. This commission tries to fulfill the duty it is assigned to. In the result of works, carried out by this commission, a program on poverty reduction and economic development was elaborated. The program was prepared with the assistance, consultancies and help of international organizations - their representatives took part at this work as well.

We have familiarized ourselves with this program and today it is submitted for the discussion at the nation-wide conference. This program can be carried out by speeding up and improving of works that we have been doing so far. In other words, the market economy should develop, expand and cover all spheres of Azerbaijani economy. Economic reforms must be carried out in all spheres. Along with economy, the reforms to be carried out in the sphere of education and healthcare are of great importance too. Nowadays we have reached such a point that, keeping on continuing the economic reforms, we must ensure prompt implementation of reforms in the spheres of education and healthcare.

Foreign investments must be attracted. Foreign investments are keeping on growing in our country. Attraction of billions of USD dollars worth foreign investment is expected in the coming years. Rationally using the world experience, different projects will be realized in our country with the support and loans of international financial institutions - the World Bank, the International Monetary Fund, the Islamic Development Bank, the Asian Bank, and other banks. Actually we set in motion the possible potential of economy. But realization of new projects is required for elimination of unemployment and opening of new job places. Our Ministry of Economic Development has such projects. The minister will report about it. According to the information communicated to me, some 3 billion USD worth investments is envisaged to be laid down under these projects. It will be possible by the aid of donor countries and organizations.

Having carried out work with different organizations, we submitted the State Program to the public consideration at the conference, at the same time we are discussing it with international organizations that took part in the preparation of this program. Along with investments attracted to the oil and non-oil sector, our activity for attraction of new investments and realization of new projects - I would like to remind that these are projects elaborated with international organizations, - will ensure the poverty reduction. Therefore, we are going to discuss these issues together.

I am very pleased that representatives of all invited international organizations take part at this conference. I am confident, that they will contribute to the final preparation of this program and its realization in the future.

At the end of my speech I would like to say that having found out a way from hard situation in early 1990s, Azerbaijan has been steadily developing, this development became even more rapid after 2000, our country is moving ahead. The economy and people of our country have prosperous future. We ensured it on the basis of the works that we carried out so far and works to be done in the future will accomplish it. Great profits are expected in the oil field. This is national wealth of Azerbaijan. This wealth can be used for development of the most important spheres of Azerbaijan. However, the major part of this wealth must be accumulated in the Oil Fund and preserved for future generations.

As you may know, for the first time I allotted 76 million USD from the Oil Fund for improvement of social condition of refugees and construction of houses for them. The state budget is being reviewed in Milli Majlis. Some funds will be allotted for closing our budget gap as well. However, the income of Oil Fund will increase and billions of USD worth assets will be accumulated here. But it should not definitely set us at ease. This is guarantee of economic situation in Azerbaijan.

At the same time, we have great possibilities in non-oil sector. We have big potential in free sector, and other sectors not related with oil. Our objective is using all of these possibilities and ensuring of economic development and improvement of people`s well-being. I would like to say that we have real possibilities for this now. In the result of works carried out so far we succeeded to obtain many achievements and create a very reliable basis for coming years. If we were trying to develop the economy of Azerbaijan from scratch, in the conditions of declined economy in 1994-1995, today you know that we are staying on the solid basis. This basis consists of independence of Azerbaijan, freedom, building of free, democratic, secular and legal state in Azerbaijan, Constitution of Azerbaijan. I reiterate that Azerbaijan has a strong economy. We are staying on this strong basis and we will go ahead from here. And one of our main duties on this way is reduction of poverty. I think that this problem will be reflected during discussions to be held today and the State Program will be finally accepted and realized.

Thank you.