“Strategy of socio-economic development”: Introduction of green and digital technologies Review by Caliber.Az

For the second year already, the country has been implementing a set of measures “Strategy for the socio-economic development of Azerbaijan for 2022-2026”. This document is aimed at qualitative transformation of the socio-economic basis of the country, the development of human capital, the introduction of green and digital technologies (4IR), as well as the implementation of initiatives to revive the Karabakh region, etc. In order to assess the work implemented within the framework of the strategy and monitor the efficiency of the undertakings, a meeting of members of eight specialized working groups and deputy heads of a number of government departments was recently chaired by the head of the Staff of the Cabinet of Ministers, Rufat Mammadov.

The key directions of the “National Priorities for Socio-Economic Development: Azerbaijan 2030” adopted a little less than a year and a half ago and the mid-term “Strategy for Socio-Economic Development of Azerbaijan for 2022-2026” implemented within the framework of this document are designed to ensure a qualitative transformation of the domestic economy by increasing competitiveness of agricultural, industrial and other non-oil sectors in foreign markets, their orientation towards innovative trends.

Among other things, we are talking about the development of components of industry 4.0, the green economy and energy, increasing the share of knowledge-intensive, innovative production, ensuring the digitalization of the state, utility and corporate sectors. At the same time, large-scale transformations are coming in the educational sphere, the development of human capital and the formation of start-up infrastructure, which will make it possible to more fully integrate the production and personnel potential of the republic into the system of the international division of labor.

Bolstering the country’s economy should play a basic role for the social transformations planned in the strategy: increasing pensions and social payments, digitalization of the labor market, creating new jobs, including through self-employment projects, public works within the framework of public-private partnerships. The key driver for the development of the country’s economy in the coming years will also remain large-scale initiatives to revive the Karabakh and Eastern Zangezur economic regions: in particular, about 6.6 billion manats were allocated from the budget for their development in 2020-2022, another 3.1 billion manats are planned to be channelled into it this year.

In 2024-2026 - during the second stage of reconstruction and revival of liberated lands - it is planned to attract up to 10.5 billion manats of budget funds - mainly for the construction of housing, creating the necessary conditions for the return of about 35,000 families. Thus, from the beginning of this year, projects of the First State Program of the Great Return have been accelerated in Agdam, Shusha, cities and villages of Lachin, Fuzuli and Zangilan districts, where, within the framework of the strategy, significant results have been achieved in the implementation of the concept of smart city and smart village, the formation of modern agricultural-industrial clusters, etc.

Significant achievements in the implementation of the development strategy for 2022-2026 were achieved in the renewable energy sources (RES) sector: in particular, a green energy zone is being formed in Karabakh, a dozen small hydroelectric power stations have been reconstructed, and in the near future, solar and wind stations will be created here. Similar steps are being taken in the Nakhchivan Autonomous Republic (NAR), where solar stations are being built and the NAR-Türkiye-Europe energy hub is being formed.

For the same purpose, work has begun on laying the Black Sea Energy underwater electric cable along the bottom of the Black Sea: this energy line with a capacity of 1,000 MW is intended to supply electricity generated in the renewable energy sector from Azerbaijan to Europe. The next step will be to attract foreign investment to develop the wind energy potential of the Caspian Sea, produce green hydrogen, etc. It is predicted that in 2022-2026, the country's non-oil GDP will increase by an average of 4-5%, for which a healthier and more competitive business environment is being formed in Azerbaijan, and the state is consistently expanding support for entrepreneurship development. Large-scale reforms are being implemented in the tax and customs spheres, greater transparency has been ensured in the field of public procurement, and tenders themselves are held in a digital format.

The Competition Code will soon be adopted, which will strengthen the fight against monopolization of certain segments in trade and suppress unfair competition. The efficiency of state-owned legal entities will be increased, through the reorganization of state-owned companies and the introduction of corporate governance principles, their accountability and transparency of financial activities will be beefed up. Mechanisms for supporting business startups and incubators, business projects for export-oriented production and services are being improved, including expanded access for small and medium-sized businesses to new preferential financing mechanisms. All this will increase the share of the private sector in the country's economy to 88 per cent.

The most important goal of the strategy is the diversification of the non-oil economy by expanding the number of residents in agricultural parks, industrial zones and neighborhoods operating in the country, as well as the new FEZ in Alat, for which a preference regime has been created and the attraction of foreign portfolio investors has been expanded. The next step in this direction will be the creation of the innovation cluster Absheron Valley, provided for in the priorities of the strategy, for the development of which, it is planned to allocate 221 million manats from the budget next year.

In general, the government estimates the total volume of investments (including private ones) in the implementation of projects and activities within the framework of the country’s socio-economic development strategy for 2022-2026 at 43.8 billion manats. According to the Ministry of Finance, the state budget for 2023 provides 7.5 billion manats for these purposes, and in 2024-2026, another 16.8 billion manats will be allocated for the implementation of the strategy.

In general, over the past period, many large-scale projects have been implemented in the five basic directions of the National Priorities within the framework of the 10 goals of the strategy for 2022-2026, and 20 main target indicators have been established to achieve them. Achievements, as well as emerging problems in the process of implementing the five-year strategy, are under the close attention of the government.

The Cabinet of Ministers is entrusted with monitoring and reporting on these activities, and it is also charged with informing the head of state twice a year about the progress of the planned initiatives. The next meeting in this regard was held on November 6-7, chaired by the head of the Staff under the Cabinet of Ministers, Rufat Mammadov, with the participation of members of eight relevant working groups created to implement the strategy, as well as deputy heads of a number of government agencies. During the meeting, the results of the activities provided for in the strategy were summed up, including the results of monitoring and evaluation of ongoing initiatives by the Center for Analysis of Economic Reforms and Communications (CAERC).

A report from CAERC Executive Director Vusal Gasimli on the implementation of the strategy for the first half of 2023 was heard, detailed discussions were held, and following the meeting, appropriate instructions were given to government agencies to solve emerging problems.

Monitoring of the main target indicators has been carried out continuously since the start of the implementation of the strategy based on the criteria of efficiency, compliance, effectiveness, sustainability, based on best international experience, being the main tool for assessing the implementation of target indicators for 2026. In order to optimize this process and make information accessible to specialists and the public, an electronic portal of a multifunctional digital platform (azerbaijan2030.gov.az) has been developed.

During the meeting of the Cabinet of Ministers, a presentation of this digital tool, created to quickly ensure control over the implementation of tasks, took place. In this regard, a user manual and video instructions for using the portal have also been prepared, in turn, employees of 33 government agencies identified as the main implementers of the strategy directions have undergone training on ensuring reporting and using the digital platform.