Solid economic foundation - a driver for Azerbaijan's growth Once more about President Aliyev's interview

In spite of the impact of the global crisis and particularly strong inflationary pressures, Azerbaijan's economy grew remarkably well last year. It achieved record GDP growth, the export of energy increased manifold, and large-scale transport projects are implemented. These successes contribute to the continuation of various social undertakings that help to increase employment, salaries, and pensions, supporting vulnerable population groups. Azerbaijani President Ilham Aliyev spoke about socio-economic achievements in 2022 and targets for the current year during an interview with local TV channels.

Despite all the hardship of overcoming the post-pandemic recession and the process of post-war reconstruction of the liberated territories, Azerbaijan's economy has demonstrated positive growth in production for about two years now. On the wave of unprecedented external demand the oil and gas sector is developing very successfully, the non-oil industry, agricultural and transport spheres are also keeping up, the construction industry is gaining momentum, supported by the big construction project in the Karabakh region. Tourism, services, passenger air transportation, etc. are successfully recovering.

At the same time, as in the rest of the world and in most of the post-Soviet states, Azerbaijan is also experiencing external negatives related to the consequences of the Russian-Ukrainian conflict. It is primarily a price hike in the consumer market, linked to factors of imported inflation and the disintegration of global transport, logistics, and industrial links. The seriousness of this problem is demonstrated by the high annual average inflation rate in Azerbaijan which reached 13.9% in 2022. Moreover, according to estimates of the Central Bank and the government, in the order of two-thirds of cases, the increase in consumer prices in our country was directly or indirectly related to the processes of global price increases.

"The world is still just adjusting to the post-pandemic era. A sharp price increase is observed in many countries, including Azerbaijan. As our economy is a part of the global economy, it is a pity that we have been affected by these negative impacts," President Ilham Aliyev said during an interview with local TV channels on January 9. The head of the state noted that the growth of consumer prices has become a serious global problem, and today it often reaches two-digit values even in developed western countries, where inflation usually did not exceed 1-1.5%. Due to the global nature of the problem, Azerbaijan has rather limited opportunities to influence external processes related to the factor of imported inflation. Nevertheless, according to the head of state, the reforms implemented last year made it possible to mitigate the negative impact of external factors: including in the field of improving the business environment, promoting healthy competition, combating monopolies, as well as efforts to eliminate violations in the customs system and personnel reforms.

Equally important, the republic has taken practical steps aimed at strengthening the social well-being of its citizens. "We are trying to mitigate the impact of the global crisis on our people through social projects and programmes. A very extensive social package, which I have recently signed shows this," President Ilham Aliyev said. - In particular, an increase in the minimum wage by 15% to 345 manats contributes to mitigating the effects of inflation. At the same time, in order to improve the social security of pensioners the minimum pension has also been increased by 16.7% and reached 280 manats, and this process will be continued." The head of state emphasized that the experience of recent years shows that these steps are not one-time, but regular, and as the economic opportunities grow, social support to the population will certainly increase in the future.

Among other things, during the last period, tremendous efforts have been made to ensure transparency in the provision of social assistance to the needy, as a result of large-scale rehabilitation of this sphere abuses have been prevented and the order has been established. Today, as the head of state reminded, about 60,000 families receive targeted social assistance, approximately 460 manats per family, and the amount of this assistance increases every year. The average monthly salary is also increasing, it is expected that its level will exceed 900 manats in 2023. Equally important are steps taken by the state to support families of martyrs and disabled war veterans. Last year, 1500 flats were provided to families from this category, a year earlier three thousand flats were given to them. As President Ilham Aliyev stressed, it is our moral duty before the families of veterans and fallen heroes. This year this important work will be continued, at least 1500 flats will be given to persons in line, but in total 13 thousand of families of veterans received social support in Azerbaijan. The process of providing disabled veterans of the Second Karabakh War with modern prostheses is also being actively pursued.

Progress in the social sphere is directly related to the development of the economy and the expansion of employment in the country. In this regard, significant attention has been paid to the digitalization of all labour market processes, the conclusion of electronic employment contracts, and other reforms in employer-employee relations. In order to reduce unemployment and increase employment, support measures for small and medium-sized enterprises (SMEs) were implemented last year, including those aimed at expanding public-private partnerships, facilitating SMEs' access to public tenders and contracts, etc.

"The social sphere is a multifaceted area, and this is also where, for instance, the self-employment programme can be referred to: the initiative, which has been going on for some years now, has aroused enormous interest in the country, and even international financial institutions have been involved in its implementation," said the President, recalling that today 60,000 families are involved in the self-employment programme.

It is quite obvious that the implementation of various social programmes, investment support for the non-oil industry and agricultural sector, budgetary funding for the large-scale infrastructure rehabilitation programme in the Karabakh region and the construction of housing, social facilities, production clusters for the return of internally displaced persons, was possible only thanks to the presence of a solid economic basis in Azerbaijan - the key financial base for all socio-economic initiatives of the government.

"Last year Azerbaijan's GDP reached a record level, according to the latest updated data - 134 billion manats, foreign trade increased significantly, exceeding $50 bln, with a trade surplus of $25 billion", President Ilham Aliyev said, stressing that strengthening of economic independence is an absolute factor for further development of the country. - At the same time the external debt of the republic has reduced both in absolute figures - today it is below $7 billion, also in relation to GDP. At the beginning of 2022, the external debt made up 17% of the gross domestic product and by the end of the year, it dropped to 9.5%." For comparison, the head of state recalled that in many developed countries the external debt to GDP ratio reaches 130-150%. The relatively low level of debt in Azerbaijan, if necessary, provides the country with ample opportunities for borrowing from international donors.

The country's need for international loans is currently insignificant; the vast majority of its socio-economic undertakings are financed from the budget, while the private sector and other domestic resources are also mobilized. Moreover, along with the successful development of oil and gas projects and the non-resource sector, the Azerbaijani economy is enriched by another critical component, the transport sector, whose importance has increased manifold since the start of the Russo-Ukrainian war.

"We have been investing heavily in the transport sector for many years, attracting investments, and today the works related to both the Middle Corridor and the North-South transport corridor have been completed in Azerbaijan as a whole. Railway sections, especially the Baku-Yalama line, are currently being modernized, after which this work will continue on the Alat-Astara line. All this will increase the capacity of the North-South corridor, and the transshipment of goods through the Azerbaijani territory can be gradually raised from 15 million to 30 million tons," the head of state said.

The President also noted that in order to expand the capacity of the Middle Corridor, the capacity of Alat port terminals is being increased. Work on the modernization of the Baku-Tbilisi-Kars railway has been started - its capacity will be increased from the current 1 million to 5 million tons per year: more than $100 million will be provided from the budget for this purpose, and some of these funds have already been allocated. In the future, Azerbaijan's transit capacity will be further expanded as part of the plans to build the railway and road infrastructure of the Zangazur corridor, which are already underway. Given the huge interest of the European Union, Central Asian countries, China, Türkiye, and Russia in all the above projects, there is no doubt that in the future the country's transport sector, along with the energy sector, will become a major source of foreign exchange income.