| In 2003, the president
signed a few decrees for strengthening social protection
of the population. You have mentioned that 58% of
the State Budget would be focused on social matters.
Are social issues the main focus of the 2004 budget?
Indeed, almost 60% of our 2004 budget will be
focused on social matters. The 2004 budget has
been increased by 14% in comparison with that
of 2003. But GDP increase is planned to reach
10%. As you see the budget increase is more than
GDP increase. About 49% of our population lives
in poverty. Our main target is to strenghten the
social protection of the population. Wages distributed
in organizations financed by the budget have been
increased by 50%. In order to continue this process
in 2004 we need about $130-140 mln. We have also
allotted money to increase scholarships and wages
of scientists. The improvement of the material-technical
resources of educational centers is of great importance
to us. Another important goal is to increase the
government support to SMEs.
We also understand that one of your top priorities
is to support regional development. Is the latter
going to represent a significant part of the budget?
We have planned to allot $20 mln from the budget
towards the development of the regions. In 2004,
we are planning to increase the financing of infrastructure,
especially roads. We recently implemented tax-customs
reforms and we decreased the tax rates to stimulate
the business climate in the country. In 2004,
for the first time, the Budget system law will
come into force. It includes the state budget
and those of the Oil Fund and State Social Protection
Fund. Moreover, the peculiarity of the 2004 budget
it its transparency. The 2004 budget was approved
in the parliament due to both functional and economic
classifications. For the first time the draft
budget was published in the press and proposals
and viewpoints from the public have been taken
into account. Therefore, I suppose the 2004 budget
will be very efficient. It is based on tough tax
policy and the budget specifies a 1.5-2% inflation
rate. Thus, the population's real income will
increase by 25-30%, which is the requirement of
the Poverty Reduction Programme. In 2004 we'll
complete the last phase of establishment of the
state treasury system and the control policy over
the latter.
How do you intend to cover the 2004 budget
deficit?
When we try to cover a budget deficit we try
to avoid inflation.We direct funds coming from
the privatization towards covering the budget
deficit. We take long-term credits from WB with
0.75 interest rates for 35-40 years. We take all
this into consideration in the general discussion
of the macro-economic problems. That's why we
don't face serious problems in solving these issues.
You are also responsible for the external debt.
What are the main indicators you would like to underline
in order to show that Azerbaijan is on the way to
sustainable economic growth?
The most important is the non-oil sector development.
It is the main point of our development programme.
Our infrastructure doesn't comply with today's
standards. Therefore, foreign direct investment
and credits must be directed towards the non-oil
sector. At present, the reserves of the country
make up $1.6 billion. Our foreign debt makes up
$1.5 billion and it is $185 debt per capita in
the country or 22-23% of the GDP. Due to the international
practice, if the foreign debt makes up 45-50%
of the GDP it is normal.
|
We have projects to
get credits which will mainly be directed to the
development of infrastructure, energy, gas and water
supply, roads, utilities and SMEs. The world community
and international institutions realized that Azerbaijan
is a good partner. Our goal is to get soft credits,
i.e. long-term credits with low interest rates for
20-40 years. In this regard we are working with
the WB, International Development Association, EBRD,
Asian Development Bank, Black Sea Bank, IDB. We
have also worked out a legal base for getting credits.
We apply procedure rules on the credits taken under
government guarantee and there is a State control
over it through the Ministry of Finance. We open
special accounts, we monitor those organizations
and I must say we haven't met any serious problems
over the past 2 to 3 years. But there is a direct
control by banks over the credits taken without
government guarantee. During 2005-2007 we'll have
large money inflow in the country due to the export
oil to World markets through Baku-Tbilisi-Ceyhan
pipeline. We have to think about making investments
with those funds. And that's why we are working
out a strategy plan for long-term management of
the oil revenues. We will both get credits from
the international financial institutions and the
Oil Fund as well. We have to take measures in order
for it not to affect our macro-economic indicators.
What is the growth rate that you are expecting
for the next 10 years?
If from now on the GDP increases by 10%, and
considering that we are going to put into operation
the BTC pipeline, it means there is a great potential
for economic growth. You can get the exact figures
and indicators from the Ministry of Economic Development.
We know that Ministry of Finance is supervising
the insurance market in the country. According
to you what are the priorities in terms of creating
better conditions for insurance companies in Azerbaijan?
Yes, it is one of our priorities. We are interested
in improving and consolidating the insurance companies
in order for them to be more competitive. Currently,
we have about 30 insurance companies in the country.
Few years ago it was about 50. We increased the
amount of the authorized capital.
I think the authorized capital of the insurance
companies will increase in the next few years.
They will take more risks. We are also creating
favorable conditions for foreign investors to
operate in this sector. We already have such kind
of companies. We have JVs with Great Britain,
Turkey and others. As a result, insurance premiums
increase dramatically every year. We are also
taking measures to inform people about the insurance
activity in the country. Special faculties dealing
with insurance have been opened at the universities
under my proposal.
What can you say about the privatization of
Azersigorta?
We are getting prepared for it through due diligence,
analysis… we are still working on some concrete
proposals.
|
V.I.P. INTERVIEWS
