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Elnur Aslanov: The recent economic development tendency observed in Azerbaijan shows that IMFâ€™s negative forecast will not come true

28 July 2008 16:11 (UTC +04:00)

-How do you evaluate the recent forecast of the International Monetary Fund in connection with Azerbaijan?
-I should say that this report is based on the current statistical indicators. The report shows that oil sector predominates in Azerbaijanâ€™s economy at present. The complications are pointed out in case the situation continues. But the report has not taken into consideration the measures taken and to be taken by the government in connection with the non-oil sector. While drawing up such reports international organizations assess more the current situation, they ignore the development tendency in the country, and this causes serious mistakes of these organizations. For example, at the beginning of this year IMF forecasted 3.7% economic growth rate in the world for 2008 and 3.8% rate for 2009. But at the end of last week the organization admitted its mistake and increased the worldâ€™s growth rate by 4.1% for 2008 and 3.9% for 2009. The organization also increased economic growth rate of the US for the current year from 0.5% to 1.3% and economic growth rate of the European region from 1.4% to 1.7%. As seen, attention should also be paid to the six-year forecasts, because according to the simple statistical rules, the probability of being mistaken rises as the time passes. The recent economic development tendencies of Azerbaijan shows that IMFâ€™s negative forecast concerning economic growth will not come true.
If we analyze the report thoroughly, it should be noted for objectivity that according to the report only one of the indicators will be relatively violated for a long time. And this is the increase of stable prices and gross domestic product (GDP). But if we attentively review the report, we will see that despite relative decrease in GDP, Azerbaijanisâ€™ purchasing power abroad in USD will increase. In 2012, when GDP growth rate will reduce, national income per capita will increase from 9700 USD to 11.148 USD and in 2013 to 12.915 USD. Generally, the highest rate of the national income per capita will be observed in Azerbaijan in the forthcoming six years. The amount of GDP per capita in Azerbaijan will increase from 3.663 USD in 2007 to 12.915 USD in 2013. I should mention that in 2003 national income per capita in Azerbaijan and Armenia was approximately equal. But forecasts show that national income per capita will be three times more in Azerbaijan than in Armenia in 2013. In 2013 Azerbaijan will take the 56th place in the world for the national income per capita. Our country was the 91st among 181 countries for this indicator last year. Increase of the national income per capita will strengthen Azerbaijanâ€™s role and image in the world economy.
If the specific weight of Azerbaijan in the world economy was 0.054% in 2003, this figure is expected to double and reach 0.117% in 2013. In this respect, it is forecasted that Azerbaijan, which was in the 90th place among the world countries for the amount of GDP in 2003, will reach the 73rd place in 2013. During this 10-year stage Armeniaâ€™s contribution to the world economy will not change relatively (2003 â€“ 0.020%, 2013 â€“ 0.029%).
-Can activities taken on productive usage of collected incomes cause failure of International Monetary Fundâ€™s forecast?

-One of the failure of IMFâ€™s forecast is proved with an executive order signed by Ilham Aliyev on 2005-2007 long-term strategy on usage of oil and gas incomes on September 27,2004 to ensure productive usage of collected incomes in State Oil Fund of Azerbaijan. The strategy envisages productive usage of incomes, large-scale development of infrastructure, small and medium-sized entrepreneurship , regions, and non-oil sector. The document also covers measures taken on decrease of poverty , solution of other social problems, increase of intellectual and technology base of economy, development of human capital, preparation of high quality personnel in the country and abroad, qualification of personnel, strengthening of security capacity of the country, reestablishment of released territories , returning of IDPs to their lands. Usage of incomes should be divided in three directions.
First direction includes special investment portfolio including 25% of incomes for future generations, stabilized portfolio for covering budget constraint, expenditure portfolio for execution of important and strategic projects. These projects include Baku-Tbilisi â€“Ceyhan oil pipeline, Baku-Tbilisi-Kars railroad, Baku-Tbilisi-Erzurum gas pipeline, water pipelines. Successful implementation of strategy contributes to further development of Azerbaijan, as well as non-oil sector.
One of the priorities in non-oil sector is development of information and communication technologies, tourism and agriculture. Development of information and communication technologies and tourism ensures durability of welfare and assist integration into post industry, i.e transformation into information community.
-How do you assess business in non-oil sector in Azerbaijan?
Business in non-oil sector develops gradually. â€œSingle Windowâ€ Principle has been applied to eliminate corruption, simplifying registration of entrepreneurial companies early in 2008. Registration of legal persons has increased three times more than last year. Retail trade enterprises have increased by 39% in past five years. Establishment of special economic zones will improve Azerbaijanâ€™s position. Adoption of Customs Code, measures on membership to World Trade Organization will simplify works of entrepreneurs.
-Will foreign investments increase in non-oil sector?
-We can expect increase of foreign investments in non-oil sector. It is enough to look at 2007 world investment Report of UNCTAD counted direct foreign investment potentials, assessing investment situation in oil and non-oil sectors. Azerbaijan took 73rd place for revenue capacity index of foreign investments in 2004 and took 65th place in 2005. Capacity increase is linked with positive changes in investment situation of the country. Azerbaijan has strong position in realization of entry of foreign investments and for capacity index. Assessment of both of two indexes shows improvement of investment situation in non-oil sector and involvement of future capitals in this field.