Speech by Heydar Aliyev, the President of the Republic of Azerbaijan at the international conference, dedicated to the reforms in the system of public administration in Azerbaijan. March 16, 1999

Dear ladies and gentlemen!

The international conference that started today in our republic is dedicated to the reforms in the system of public administration in Azerbaijan.

Serious steps were taken for strengthening and promotion of state independence in our country in the course of the last years and positive results were obtained. The process of legal, democratic and secular state building is being implemented successively in Azerbaijan. A great work is done for transition of economy of our country from the system of planned economy to the system of market economy. The market economy is being established, formed and developed. All this is result of carrying out of reforms in all spheres in Azerbaijan. Implementation of economic reforms carried out in the country has complex features. The program of privatization, carrying out of land reforms and privatization of state property give their first positive results.

All of this is being carried on the basis of the first democratic constitution of Azerbaijan and more than 200 laws adopted and decrees signed by President. In this result the great changes took place in all spheres of Azerbaijan. The reforms carried out and measures undertaken provided the development of economy.

It is well known that economy of Azerbaijan has experienced the period of regress since 1990 and was in social-economic crisis. In this period the economy was reducing by 20% annually. The measures undertaken on our behalf and reforms carried out resulted in establishment of macro-economic stability in the economy.

The stability in economy was achieved in 1995, beginning from 1996 our economy stepped on the way of development. In this result the gross domestic product in Azerbaijan grew by 1,3% in 1996, by 5,8% in 1997, by 10% in 1998. The volume of industrial and agricultural production increased in 1998 as well. Measures, applied in financial system gave good results.

Till 1994, including 1995 the inflation struck a strong blow on the economy and financial system of Azerbaijan. As the consequence of measures undertaken and reasonable economic and financial policy it was prevented and inflation was eliminated. In the course of the last year, in particular in 1998 the inflation was completely eliminated. Moreover, in 1998 the rate of national currency of Azerbaijan - manat in respect to the US dollar strengthened so much that the fall of price of consumer products and deflation were observed.

The results obtained in consequence of all this in other spheres are pleasant also. Of course, for obtaining these achievements it was necessary, first of all, to ensure the public and political stability and it was of crucial importance in connection with situation after independence of Azerbaijan.

It is well known, that beginning from 1988 our republic was experiencing tense public and political processes in the result of Armenian-Azerbaijani conflict. At the same time, Azerbaijan lacked stability, the illegal struggle of several groups for power and activity of illegal armed groups tensed the internal situation in our country to the utmost extent. Of course, it had a very negative effect on the economy of Azerbaijan. Therefore, the main goal staying before government of Azerbaijan was to ensure the public and political stability. Having ensured it in 1994-1995 and having made it irrevocable the implementation of reforms in all spheres became possible and they give well-known results. In consequence, the respect towards Azerbaijan in global scale grew, interest to the economy of our country became quickened and the process of investment to our republic by foreign countries commenced. It continues to develop in ascending directions.

Last year, in 1998 some 1,5 billion USD worth investment was made into the economy of Azerbaijan. Azerbaijan takes the first place amongst the CIS countries on volume of investment per capita. In general, Azerbaijan takes a very distinguished place amongst members of the Commonwealth of Independent States.

It is well known that crisis that took place in several regions of the world in 1998 influenced other countries as well. Especially, the financial crisis that took place in Russia and continues so far influenced all surrounding countries, including Azerbaijan. However, as against other countries, we managed to establish such a situation in financial and economic spheres in Azerbaijan in the result of right economic policy, well-considered measures and reforms we could reduce the influence of large crisis in Russia on our country.

As I have mentioned earlier, in consequence of all this the economy is developing in Azerbaijan. We can see the positive results of privatization. 55% of gross domestic production in Azerbaijan pertains to the private sector. 26% of industrial products is produced by private sector. 95% of agricultural products, 98% of commerce and 70% of construction in Azerbaijan pertain to private sector. It ensures obtaining of positive results in the development of economy. At the same time, these results prove that economic reforms including privatization are being implemented on the right way.

At the same time, the reforms in the public administration system of Azerbaijan were carried out and positive results were obtained. In relation with realization of economic reforms and program of privatization, more than 20 Ministries, State Committees, Agencies and Enterprises were liquidated. Some bodies in different ministries and administration institutions were either liquidated or their current activity was transformed to the needs of market economy.

All of these are our works and achievements. But this is beginning of our activity. The reforms are underway on all directions and they must be continued. The implementation of reforms in the system of public administration is of special importance in comparison with other reforms.

In general, we commenced to carry out many of these works later than some members of the Commonwealth of Independent States. Sometimes, those who criticize our activity or holding a partial position tried to accuse us in being late to carry out necessary reform and consequently, to pay insufficient attention to reforms. We have given an appropriate answer to these adventurers and those who try to destroy the economy of Azerbaijan. However, the results of the last three years show that while comparing Azerbaijan with several countries experiencing transition period one founds out that our work is more profound. We undertake all measures after due consideration and they give positive results.

However, the implementation of reforms and privatization reveals many errors and shortcomings, even mistakes. For instance, the cotton industry takes an important place in agricultural production of Azerbaijan. Having carried out land reforms and granting the land to peasants we have taken serious steps. At the same time we privatized and continue to privatize the rural administration system as well as enterprises of agricultural production. It must be done. We did it and we would do it henceforth. Unfortunately, some ministries and state bodies failed to find out problems and prevent errors and negative tendencies related with carrying out of these measures. It shows itself in cotton-growing.

These issues were subject of discussions held in Presidential Apparatus and Cabinet of Ministers recently. It became evident that despite of success of privation of cotton-processing factories, the results of the work are not satisfactory, the volume of production was even reduced in comparison with previous period. For instance, the production of cotton in 1998 reduced in comparison with 1997. The level of preparatory works in the field of cotton production for 1999 is not satisfactory. What is the reason? The reason is that having granted lands to the peasans and privatized the cotton-processing factories, state and government bodies gave up these issues and left the settlement of all complex and difficult problems for the consideration of private sector. Of course, it is not easy to destroy the system formed in the course of decades and establish private sector based on principles of market economy. It requires state and government support, care and aid. However, they were not done. Not merely were they done but failed to be considered. Therefore, we witness the great reduction, even unbelievable reduction of cotton production in the result of privatization and implementation of land reforms.

I have discussed these issues yesterday and I gave necessary decrees. Some documents will be issued shortly. We cannot leave a big party of our economy in such a situation.

Drawing the evident facts to you attention I would like to state that economic reforms, privatization, and all works carried out in the economic sphere aimed at development of the economy, improvement of well-being of the citizens and settlement of social problems. If we cannot succeed it in the results of carried out works, we prejudice ourselves all our works and reforms for implementation of market economy and realization of privatization. Of course, we can not admit it.

Hence, all works that we did so far require intensification of reforms in the system of public administration.

I would like to say that we cooperate closely with international organizations - World Bank, International Monetary Fund and European Union in relation with state building and process of economic reforms. I am pleased to note that this cooperation gave good results for Azerbaijan. We are satisfied with this cooperation. I express my gratitude for care, attention and aid provided by World Bank, International Monetary Fund. I highly appreciate the attitude, support and care of these organizations to Azerbaijan. Our cooperation is long-term. Therefore we take counsel from time to time with International Monetary Fund and World and use the advises for realization of some measures.

Today I would like to say that the advises provided by these organizations helped us so far. Sometimes the opinions on vainness of cooperation with these organization appear. We do not share this opinion. We think that this cooperation is beneficial, and is very important for realization of economic reforms in Azerbaijan. We are going to continue this cooperation in the future.

In relation with implementation of reforms in the sphere of public administration we have been cooperating with World Bank so far and for the purpose of taking serious steps in this sphere we applied again to World Bank. They treated our application very well. We commenced to elaborate the new programs on reforms in the sphere of public administration with them. In this relation, I have issued a large decree and established a commission on December, 1998. This commission is consisted of several sections. They must deal with elaboration, submission and implementation of projects for carrying out reforms in all spheres of public administration.

The reforms in public administration system is one of the most important objectives facing Azerbaijan in 1999 and in the following period. We consider it very important. I think that owing to the support of World Bank we will carry our these reforms successfully.

While carrying out all our activity we make use of world experience, the experience gained in the result of implementation of reforms in different countries. We are trying to implement this positive experience taking into account the specific features of our country. However, we study the negative results, experience and mistakes in order to avoid and prevent them.

We and other countries are aware of processes underway in the countries experiencing the transition period. For instance, Russia is a big country and it was almost one of the fists amongst the CIS countries that commenced to carry out reforms. But it faced with big and difficult problems in the result of errors and mistakes committed while carrying out reforms especially economic ones. We are studying and discussing it. I reiterate that not depending on the region of the world, we try to use their experience.

I think that this international conference will be an important stage in implementation of all reforms, especially those in the sphere of public administration in Azerbaijan. The discussions to be held during this conference and general conclusions on your experience will help us in the future.

I declare opening of the work of the conference. I wish success to the work of the conference.