Speech of the Azerbaijan President Heydar Aliyev at the opening ceremony of a new administrative ‎building of the National Bank - October 6, 1998

Dear ladies and gentlemen!

Dear guests, friends!

Today a new significant event is happening in a life of Azerbaijan. We have gathered at the opening ceremony of a new building of National Bank of Azerbaijan. Today listening to the speakers here I had a look at the past, and I think that I participate in opening of the bank building for the second time in my life. The last years the bank was not considered as the significant organization in economic, social, political system of the then state in spite of the fact that totals of all finance and economy passed through it. It is natural, because the structure of former Soviet socialist economy has been constructed on completely other principles.

We build factories, plants, hospitals, schools, palaces, centers of culture, libraries and residential buildings. Now it is seen by all in Azerbaijan. Opening of some of them became the big celebration, many people took part in ceremony of their opening. I was also the participant of similar ceremonies.

However, during the Soviet authority only one bank building has been constructed in Azerbaijan. At that time it was named construction bank. Now it is called Industrial-Investment Bank. Its building is on the right. I remember, at that time it has been constructed by Construction Bank due to its funds. But Construction Bank in Azerbaijan was not completely independent - existed Construction Bank of the USSR - and Azerbaijan Construction bank was its part. Now in this building there is an Industrial-Investment Bank of independent Azerbaijan.

The Azerbaijan state bank located in city centre by which we frequently pass, has been constructed during our youth - in 1931. Probably, in 1931 this building looked considerable and drew attention as it was in city centre. I remember, when we were students, in our young years when we appointed meetings to each other or young men appointed meetings to girls, they met in front of the bank building. I see that I have reminded much pleasant minutes as the majority participating here - I think, both women, and men, - at that time appointed the first meetings in front of the bank. I speak about it with exactness because I also appointed meetings there.

Yes, it has passed decades, and the Azerbaijan National Bank is still in this old building. I do not know how it will be used now. But your applause which has sounded in reply to my words, give me right to tell that on this building it is necessary to hang a board of honor and to write these words that hundreds, thousands, ten thousands of people appointed the first meetings here to find the happiness.

However, being the independent state nowadays, we go on a way of free economy, we democratize all areas of our life, and democratization in economy means free, market economy; to go on this way, to reach this level means carrying out the economic and financial reforms. We are very seriously engaged in this work in last years and I think that we had achieved significant successes. And a financial-bank system stands in the center of these works. Any independent state connected closely to world economy, going on a way of free market economy, should establish the financial-credit, financial-bank systems corresponding to modern requirements, the world standards. We have established these systems and today we continue to develop them. Therefore both functions and circle of activity of the National Bank considerably grows in Azerbaijan. The National Bank is the center of all bank system in Azerbaijan and should create opportunities for development of free private bank system in the country, conduct its activity in this field. Therefore the Azerbaijan National Bank, undoubtedly, cannot work as in the past and operate in an old building. And the decision which follows this necessity is construction, creation of a new building for National Bank. And here, in the center of Baku, such building is being constructed, and considering this event very important, great event in our life, and, in particular, in our economic life we together with you have gathered here and we are implementing the opening ceremony in such solemn condition.

On this occasion I congratulate the Azerbaijani citizens, independent banks in Azerbaijan, bank workers, all financial workers and I want to express confidence that the Azerbaijan National Bank will successfully work in a new, modern building for the sake of development of Azerbaijan's future economy.

The work, reforms carried out in the economy, finance, bank fields in Azerbaijan, first, have consecutive, regular character and are based on world experience, on experience of financial systems, on bank experience of the world's economically developed countries. Today I declare that Azerbaijan will go as well as henceforth on this way, and the financial-bank system in Azerbaijan will develop year after year, and all this will develop rhythmically with the Azerbaijani economy. I have bases to speak about it as the reforms conducted last years, - economic reforms, the reforms conducted in a bank-financial system - yield already the results and provide development of economy in Azerbaijan, provide the stable currency market and improvement of people's welfare.

I once again want to note that in that system in which we lived, we did not know bank because operations with bank have been carried out only by accountants of the enterprises and organizations. They received money from bank and paid wages and salaries. And all financial operations of the last system were carried out by itself, under laws of that system, it was written on a paper, this amount was transferred to there, that amount was transferred from there. That is the money mass was used for a private use of people. It was not used for development of economy and its activity.

Now the bank plays the important role in each citizen's, each person's life. People use banks, private banks which provide improvement of their welfare, financial, economic conditions, and also reliable keeping of their means.

In Azerbaijan as a result of reforms, the private bank sector has already been established. And it has passed some stages. For example, here it was said that several years ago there were 210 private banks in Azerbaijan, but now it is 79. However the financial capital of these 79 private banks has increased twice in comparison with the period of 210 banks. These are very good parameters and completely natural processes, but at the same time controllable. This process is a result of implementation of providing the macroeconomy, reforms in financial-bank system, and as a whole, economic reforms in Azerbaijan. I suppose that this process will proceed, private bank structures in Azerbaijan from the capital viewpoint, and the bank culture from the bank activity viewpoint will develop even more. It is possible the number of these banks will be reduced again, because there is a competition - strong, skilful banks, certainly, force out small, poorly acting banks, and thus Azerbaijan will gradually reach to the standards of bank system in the world's advanced countries.

But once again I note that it is the result of the economic policy carried out by the Azerbaijan state, the government. It has not fallen from the moon. Financial, monetary, currency systems make the basis of a life of all people and economy. Certainly, first of all, the slightest inflation influences on both a national economy, and on living standards of people. Azerbaijan has passed these ways. In 1992 Azerbaijan put into circulation the national currency - manat. Here heads of our bank have informed that when manat was put into circulation in 1992, 1 dollar made 15 manat, and 1 manat - 10 Russian rubles. There was such a situation here. But then intensive inflation which was observed in Azerbaijan in 1993-1994, has lifted cost of 1 dollar up to 4.400 manat, and it happened during a short time, for one and a half year. Pay attention, if 1 dollar made 15 manat, and for short term it has reached 4.400 manat so what negative influence rendered on a living standard of people, on economy. And this process went intensively, and the Azerbaijan's financial system appeared in very ruined condition. And as a result of it inflation in Azerbaijan made 1.800 percent in 1994.

At that time sometimes you thought Azerbaijan would never overcome such inflation because the situation was very heavy. Some people considered everything hopeless. Some people at that time tried to involve us in old system, to put obstacles to liberalizations in economy, to realization of market economy, liberalization of foreign trade. Thus various obstacles for creation of a private sector, for activity of businessmen were created in Azerbaijan.

In July, 1994 I issued the decree on regulation of a financial system and ensuring financial stability in Azerbaijan. As a result of executing this decree and other decisions accepted by us during short time we, I can safely tell, have strangled the inflation. I remember, in 1995 inflation was 83 percent, in 1996, in my opinion, 8 percent, in 1997 0, 4 percent, and now in Azerbaijan it does not exist.

I repeat, those terms, concepts, themes are not probably clear for our vast masses of population. However, I think the majority of people gathered here are financial, bank workers, businessmen. They understand what means decrease of inflation from 1800 percent up to zero during the short term. We day by day increase cost of manat and for last two years cost of manat by comparison to dollar has increased and become stronger. Even big financial events which have occurred in last months, inflation in East Asia, in Far East and new financial, economic crisis which has occurred in Russia in last months, could not influence Azerbaijan.

To tell the truth, here in Azerbaijan some forces, groups, parties, persons who are nowadays in camp of opposition, at that time willingly said: "Aha, cost of ruble has fallen in Russia, inflation in Russia, one of these days it will be in Azerbaijan". I am speaking to these people that you are unfortunate people. If you live in this country, you are sons of this nation, citizens of Azerbaijan and if similar event would take place in Azerbaijan what would be your financial position? Probably, they live in good conditions because of illegal incomes, that is why it makes no difference for them. But it is necessary to think of people, citizens. No, our dear opponents, know, though you tried very much that the events which have occurred in Russia, would pass to Azerbaijan, but we have prevented it. And it has happened not automatically. Carrying out clever economic policy, financial policy in Azerbaijan and consecutive supervision over processes occurring in the world, duly taking necessary measures by us has rescued us from similar events and we could prevent them.

Yes, I worry that such events happen in Russia. These events have passed both to Ukraine, and to other countries which are included in our Commonwealth of Independent States. I am concerned because we establish economic relations with these countries, including Russia. And in order to establish normal economic relations we want there economic, financial stability but no inflation. We wish it as true partners, as the country conducting normal and healthy cooperation. But everything does not depend on us. Probably, they have now faced heavy consequences of the made mistakes, within one year the government was replaced three times. But we do not have necessity to change the government as the governmental affairs go normally, the government conducts correct economic policy and as a result of this, macroeconomic stability has been provided, monetary circulation is at a normal level, there is no inflation in Azerbaijan, cost of national currency of Azerbaijan - manat is strong. On the occasion of these achievements I congratulate both financial and bank workers, and also all economists.

Last years Azerbaijan faced big problems. All this has delivered big blows to economy. Some people compare today's level of economy or industry with 1990's. They say the level of economy and industry was so in 1990 and now it has been decreased. First, I advise these people to think who created that high economic level of Azerbaijan and who destroyed it in 1990. We were founders! And they were destroyers. Destroyers came after us, they used the high parameters achieved by us and accuse us, criticize us, state unfair words to our address. You know that you have done nothing at that time and now.

Yes, today with feeling of pride I say, and it was recently said also on TV about it, that then position was good because there were so much riches, property from the Soviet authority. But after that all of them have been destroyed. It is in fact that you have not created these riches, property and economy, it has been created by us as well! With feeling of pride I say in 70-80s years, in particular, in the first half of 80th years the economy developed intensively in Azerbaijan, the huge economic, industrial, agricultural, infrastructural, transport potential has been created and therefore the living standards of people has lifted. Due to this, those years our cities have been constructed, Baku, Sumgayit, Ganja, all villages, settlements have developed. But in connection with the collapse of the Soviet Union, and also the mistakes made by heads of Azerbaijan during that disintegration time, at last, in connection with incompetent, inexperienced, illiterate people coming to power the most part of this economic potential has been destroyed in Azerbaijan.

But we cannot and we shall not conduct economy on a former system. In that system I was one of those who developed this economy not only in Azerbaijan, but also on a scale of the Soviet Union. I was one of those who was at the head of the Soviet Union government and during five years was engaged in economy of that country in the Kremlin. I know also the positive results received in economy during this period, and I know also that this economy is already a history. We build new economy and it is necessary to undertake wise actions for transition from that economic, financial system to new economic and financial system.

Unfortunately, in 1991, 1992 and 1993 such wise actions were not undertaken, wise decisions were not made, reigned arbitrariness therefore in 1994 we faced such heavy position. Therefore those years the economy of Azerbaijan annually regressed, industrial, agricultural production, gross domestic product annually dropped for 20-25 percent. Certainly, situation was very bad. I remember, in 70-80th years industrial production in Azerbaijan annually grew by 8-9 percent, the national income raised for 7-8 percent, the share of the national income per capita raised as well. Yes, in Azerbaijan we could use effectively opportunities of that system, could provide development.

But this system has remained behind, and they have not created new system and, it is natural, that during this period economic decay annually went deep. We have stopped it. There was a recession both in 1991, 1992, 1993, and in 1994, even in 1995 in industrial, agricultural production, manufacture of gross domestic product. But in 1995 we stopped falling. In 1996 growth of gross domestic product made 1, 3 percent, in 1997 it increased for 5, 8 percent, and for nine months 1998 growth made 9 percent.

Dear friends, compatriots, know that these are difficult questions. It is possible, that the certain part of the Azerbaijani citizens does not feel these percent, does not feel them on their life, as they say, for satisfying the daily needs. But these are very serious steps for development of Azerbaijan's economy. Thus, we advance onward, alongside with the state construction process we conduct also economic construction. We have achieved macroeconomic stability, provided socioeconomic stability in Azerbaijan, liquidated arbitrariness, chaos, lawlessness, disorders existing in the country, and also stabilized political condition that is the basic term for inflow of foreign investments to Azerbaijan, development of our country's economy.

At the same time with the help of it, as a result of economic reforms implemented by us in Azerbaijan, we have provided macroeconomic stability and we carry out economic construction process. All this has been achieved as a result of the reforms conducted in economy, and also in financial and bank systems. See, in 1994 the volume of currency resources in Azerbaijan made all 2 million dollars. The situation was terrible. Now our currency resources make more than half billion dollars. And this currency is in reliable banks of the world.

In September, 1994 we signed the first contract with the large oil companies of the world. Certainly, by signing this contract bonuses should have come to Azerbaijan. But it became clear that before signing the contract, the Popular Front which was in power in 1992, not having prepared and not having signed the contract, has received 80 million dollars bonus from the foreign companies and then completely spent it, transferred to one private bank. A part of this money has been wasted and the private bank does not return 2 million dollars from it till this day. And the head of this private bank has run away. And look, we have faced with such situation.

But today it was spoken that all bonuses, which have been received from the contract signed in 1994, are in currency reserves of Azerbaijan. All of them are kept and will be used for Azerbaijan's today and mainly for the future of our country. Why it became possible? Because we have made such changes to our economy, our finance, that bonuses coming to us go to reserve, there is also a part of our income, and also a part of the favorable loans given to us there. Because of this reason for a short term, within three years, we could increase currency reserves of Azerbaijan from 2 million up to half billion dollars.

Monetary circulation in Azerbaijan is very interesting. Its details are known only to financiers. This is probably unknown to ordinary people. For example, in 1994, 60 percent of manat which was put into circulation did not come back. Therefore, there was emission and it was the obligatory measure. Now, according to the information given to me, only 5-6 percent of manat put into circulation does not come back. It is normal. You see, how many changes we have brought to financial and bank systems. It is on the one hand. On the other hand, our close communications with world economy, the world's leading companies, have increased investment of capitals to Azerbaijan.

In 1994 we signed the first contract. 14 contracts have already been signed, and these are being carried out. This year the capital at a rate of 1 billion 600 million dollars has been invested in our country connecting their implementation and also capital investment of all other companies to Azerbaijan. A part of this capital undoubtedly, was expended for the construction work carried out in Azerbaijan. Recently we have finished reconstruction and have put boring installation "Shelf - 5" in operation which in the past was used for drilling of wells on the oil-and-gas deposits at depths of the Caspian Sea. We have named it "Istiglal". For reconstruction and modernization of this installation it has been spent 200 million dollars. This installation is already property of Azerbaijan. It is Azerbaijan's thorough fund.

These days I visit the regions and I come back late at night. As entering to city from the southern part I see two remarkable views. I advise those who have an opportunity, to go and look. Now I can tell even about three views. First is Bibi-heybat mosque which you can see from Shikh side. It has been constructed by us. The second is boring installation "Istiglal". It reminds a tower of the big palace. Yes, we have received big riches for Azerbaijan at a rate of 200 million dollars. It has been expended 12 million dollars for general repair of a ship-building factory which is near to this installation. Now I do not want to take your time and to speak about the rest. I just want to show how to use the investment.

Now 1300 foreign companies are operating in Azerbaijan, more than 20 thousand Azerbaijani citizens works in these companies, they get high salary. It means economy liberalization of Azerbaijan, openness of our doors for foreign countries and, thus, development of Azerbaijan's economy. All these are concrete results, fruits of the policy pursued by us.

Thus, we build market, free economy in Azerbaijan. All laws, decrees have been issued in order to develop free economy and I assure you that they will be issued further as well. The basic part of Azerbaijan's economic picture is that, the businessmen stratum, Azerbaijan's national businessmen group, businessmen have already been established. They act freely. They put investments. They open all new - new working places. They carry out free trade.

Today, taking this opportunity, I declare to all the Azerbaijani and foreign businessmen that it will be created even best possibilities for business activity as well as in the future. Conducting the country on a way of market economy, as the Azerbaijani President at the same time I consider business development, creation and development of a private sector one of the basic conditions, and I will create all opportunities to all businessmen of a private sector, businessmen, all local and foreign companies, desiring to serve Azerbaijan, and I wish them successes in their activities.

It is well known that the reliable financial system, reliable banks in particular, private banks are necessary for business development.It was already spoken about it. I think that this work will be developed even more as well as henceforth. But I advise all businessmen, all people having financial assets in various spheres of Azerbaijan, to be afraid of nothing. Now, in Azerbaijan banks are reliable, also the number of private commercial banks has increased and they have strongly taken their places. The International Bank of Azerbaijan works well, and it was recognized by world banks. The National Bank of Azerbaijan also eliminates and will eliminate a number of lacks in its work, will work well. Therefore, use the Azerbaijani banks; do not keep your currency, money in foreign banks. I tell beforehand, let anybody be afraid of nothing. Who will use the Azerbaijani banks, private banks, with which they want to deal, it will be provided inviolability of their means, currencies, money.

Today, addressing here to Azerbaijan's law enforcement bodies, I have spoken more than once about it, and now I say it before you: do not prevent development of a private sector, liquidate unnecessary checks, give people freedom. Let people live and develop freely. After development of business in Azerbaijan, everything will be fine. I speak about it because I get many signals that law enforcement bodies of Azerbaijan sometimes put obstacles to businessmen, bother them, take bribes from them and do nothing as take bribes. Thus, both representatives from the foreign companies, and also the local companies who meet similar difficulties, can not carry out rational activity. I declare about it to all Azerbaijan. I condemn all such phenomena. If somebody does similar actions, he is against a today's state policy of Azerbaijan, these are contradictions to our policy. I demand to eliminate similar cases, create all possibilities for business development.

In the past it was so, that sometimes the businessman was engaged in shadow economy, in his circle he had respect, but in a society he had no such respect. Now all has completely changed, we live in other country from political, economic points of view. Any businessman, any private organization, company, carrying out healthy activity, have respect and they worked and we should render them every possible help to develop.

Dear friends, it is the second time that we open a bank building in independent Azerbaijan for last two years. Three years ago we participated at the opening ceremony of the International Bank building and as I have told, it works well. Now we are attending the opening ceremony of the National Bank's new building. I suppose that private banks will construct corresponding buildings for themselves. All this means development of Azerbaijan, development and improvement of Baku.

I am dissatisfied with only one thing, if I will not tell you it, then I can appear insincere: this bank should have not been built here. When I have learned about it I have acted against it because this building breaks architectural design, city construction of Baku and I think that it means overset of Baku city's general plan. From the beginning of the 70th years when I headed Azerbaijan, each corner of Azerbaijan was dear, native for me. As I love Baku very much, I always gave a serious attention to development of capital, its correct development from the architectural point of view. In the 70th years we some times discussed the general plan of Baku, ratified it. It has passed time, many things have changed, however city construction should not be varied strongly.

For example, I remember in 1970 we constructed opposite building, the Republic Palace. Now there are pools, flowers, trees in front of it and at that time instead of it there were one-storeyed houses in which either lived, or worked. It spoilt city's picture. During short time we have demolished all these houses, people living there have been given apartments, and created a fine corner of city on this place.

Here there is our Musical Academy, in front of it the sculpture of genius Uzeyir Hajibeyov and magnificence Republic Palace towers there. At that time our plan was such: all buildings to be lifted, the square in front of Sabunchu station, where there is Jafar Jabbarli's monument, merges together with this place, and all this turns into the big rest zone. Yes, I was the initiator of creation of the Republic Palace, and reconstruction of the square at Sabunchu station, and construction of underground stations, and erecting of Jafar Jabbarli's monument, and also creation here rest zones. Certainly, offers of Central Architecture Board of city and my ideas have been the same.

In this case, erecting here this building has broken our plan. This is not because that, it has broken the general plan of city, but this fine picture has been disturbed. To tell the truth, this building decorates the city. But I remember when this question has coordinated to me, it was intended to construct this building on the Tbilisi avenue. Then the head architect of city, having made a mistake, has authorized for construction of this building here. I have learned about it later and made the serious warning to the head architect of city. I think that despite his good services, he should be punished. But it is too late now. But if I have not told my sorrow, I would not calm down.

My words did not direct against a bank building. It comes from my boundless love to Baku, to its architectural design and beauty. I live with this love and I will live up to the end.

Despite it, I consider significant event creation big, fine building in Baku, we perceive it as the further enrichment of city and on this occasion I congratulate the Baku inhabitants, bank and financial workers of Azerbaijan from the bottom of my heart.

Dear ladies and gentlemen! I wish good health, peace, calmness and great successes to all of you and in your person all the Azerbaijani citizens, Baku inhabitants, the Azerbaijani people.

And now I start my mission, that is, to open a new building of National Bank of Azerbaijan.