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NO POOR TO REMAIN IN AZERBAIJAN BY 2010 the government forecasts

Analysis Materials 19 July 2006 10:05 (UTC +04:00)

The draft of Azerbaijan Sustainable Economic Development and poverty reduction program for 2006-2015 years will be soon submitted to the Cabinet of ministers. Heydar Babayev, Minister of Economic Development, said the project does not contain the exact schedule of the state budget expenses for poverty reduction. Alongside, by 2010 poverty in Azerbaijan might be brought to an end.

The Secretariat of Poverty Reduction of the Azerbaijani Ministry of Economic Development ahs completed work the document. Azerbaijan is almost close to final elimination of poverty in the country 2010, while final purpose indices will be established with the adoption of the program by the head of state, Babayev underlined.

Now the poverty ratio in the country is 29% of entire population. Earlier it was declared the key objective is to reduce the figure to 15% by 2015. At the same time the international organizations note poor quality of the draft State Program. The project is of declarative character. It in particular does not contain exact schedule of public budget expenses for poverty reduction through distribution by years, an official of in of the organizations said.

The Azerbaijani government is in a very optimistic mood. Azerbaijans GDP shall rise to $70bn in 2025, $8k per capita. В"This shall influence the populations welfare. We guess there will remain no poor people in Azerbaijan by thenВ", Muradov concluded.

If today non-oil deficiency of Azerbaijan makes 14% of non-oil GDP and nearly 8% of total GDP, by 2009 this deficiency will be equal to 8% and 5%, respectively, said Adalat Muradov, head of macroeconomic analysis department with the Ministry of Economic Development.

So, the government relates the countrys brilliant future with non-oil sector. Experts predict fraction of oil sector in Azerbaijans economy at about 10% by 2025. This will be achieved firstly due to the development of non-oil sector and reduction of oil production amounts. But the future development of Azerbaijans non-oil sector will also will also depend on oil sector, i.e. on use of oil revenues that shall amount in total $140bn within 20 years.

Years 2011-12 will be critical in Azerbaijans economic development as namely that moment oil production in the country is expected to reach its peak. Namely that time the government plans to join WTO, which will call for some liberation of trading rules. All that may lead to negative trends in non-oil sector of the country and our government is already taking steps to prevent them..

Foreign countries experience, he said, shows the smaller the country the higher the risk to use oil revenues inefficiently. To prevent such a misuse, Azeri government implements the long-term oil revenues use strategy approved in 2004 and lasting till 2025.

The basic principles of efficient use of oil revenues are permanent actual expenses (Azerbaijan shall spend one amount each year till 2005), invariability of permanent actual expenses, account of non-oil deficiency, transparence in oil revenues usage.

Muradov stated that the project financed from oil revenues shall be included in state investment program and approved in Milli Medjlis.

В"41% of Azerbaijans GDP and over 76% of the countrys export fall for oil sector. 34% of the state budget is formed from oil revenues. Lion share of investments is in oil&gas projects.

The majority of the Azerbaijani population connects their hopes with oil. In June the research center "South Caucasus" publicized results of inquiry on definition of socio-economic status of Azerbaijan. The inquiry was held among 1000 respondents residing in all districts of Baku. They all are Azerbaijani citizens aged above 18.

According to 62% of respondents, the economic state of the country has got improved as compared to last year. Only 14% of the inquired said that the economic situation has worsened. Very small part of citizens thinks that the improvement of economic situation in the country had a positive impact on the financial welfare (37%). Almost the same part of respondents (34%) stated that their financial situation remarried unchanged. Thus, there is a paradox the majority of respondents state that the country has developed as compared to last year, while many of then did not feel such changes in private life.

According to the Research Center, there are several logic explanations for such situation. Firstly, public idea on economic growth in the country is formed under the influence of foreign factors and first of all broadcasting media, which reports on economic successes of the country. When it is dealt with welfare of a concrete family, any foreign pressure is out of question. Secondly, such situation can be linked with psychological factors. One can come to a conclusion that rise in community incomes was not considerable enough to remember and estimate it. Thirdly, the people receive a very small pie formed as a result of economic growth of the country. So, it is dealt with unequal distribution of economic incomes obtained n the course of development of the country.

The majority of respondents (54%) guess increase in oil revenues will promote their material welfare. It means, many citizens of Azerbaijan still relate their hope for future with oil.

Meanwhile, British analysts of New Economic Foundation decided to clarify which country is the happiest in the planet. They estimated the countries in accordance with the following parameters: the durability of citizens life, ho much they are satisfied with their living and sufficiency food, as well as utilization of wastes of vital activities. As it seems, all parameters are linked with the human factor.

So interesting, Azerbaijan held 105th place in the list of successful countries. Russia ranked 172nd in a 178-member list. Italians were the most successful nation among G8 countries occupying 66th place. They were followed by Iran. Germany was the 81st, Japan 95th. Despite high living standards the UK was occupied 108th place, Canada 111th, France 129th and the United States - 150.

The welfare of citizens of Kyrgyzstan turned out best of other CIS countries 19th place. It is followed by Nicaragua. The countries satisfied with the Levin standards in CIS are Tajikistan (25th place), Uzbekistan (59th place), Georgia (101st place), Kazakhstan (125th place), Armenia (126th place), Moldova (147th), Belorus (165th), Turkmenistan (169th). Lithuania and Latvia occupies 149th and 160th.

So, Azerbaijan has not missed everything at all. More probably, in 20 years the forecasts by the government will come into reality and the poor will be so rare in the country. The Karabakh war will be also resolved, including the IDP problem. Then every Azerbaijani will become happy and the country will occupy the first place in the list of happy. Lets return to reality. We are on the eve of 2006 and there are too many problems to settle in the social life of Azerbaijani population.

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