Gubad Ibad-oglu: ‘There are some difficulties on the path of Azerbaijani modernization’

The head of the Economic Research Center of Azerbaijan, economics expert Gubad Ibad-oglu, told VK about the latest events in Azerbaijan's economic life.

- Recently the dollar has consolidated its position against the Azeri currency – manat. What is the reason for that, and what’s your prognosis?

- The dollar is consolidating its positions because the euro is going through a crisis. The manat, on the other hand, depends only on the market dollar price. The drop of the euro against the dollar is equal to the consolidation of the manat’s position compared to the euro. The dollar has been strengthening ever since the US managed to escape default, and there are some other factors contributing to this growth, such as political and economic successes of the US government.

However, the main factor here is the euro-crisis. Greece, Spain and Italy increased their debts dramatically. Today many of EU states need serious economic reforms to fight the crisis, while the US economy grew 1.6% this year, and the expected growth for next year is 2%. Industry is also growing there. However, the US is still a state with a great budget deficit.

- What important events could you list in Azerbaijan's economic life that took place this year?

- There are some difficulties on the path of Azerbaijani modernization. We are becoming more and more dependent on imports. In just the last 9 months the volume of imports has increased by 43.7%. The recession in the economy proceeds at a greater pace than any expert anticipated. This happened due to a certain decrease in oil production output. And we anticipate this trend will continue. In this case 2010 was the peak of oil output. The decrease in oil production has a negative impact on the state’s income and GDP.

- Do you expect the oil production output to continue its decrease?

- It’s hard to tell, but yes, we expect that much. That is why some preventative measures have already been put in place.

- 2011 is named ‘the year of tourism’ in Azerbaijan. Did the resort-construction projects give any boost to the tourism-sector development?

- New 5-star hotels in Baku, the amelioration of the infrastructure as well as the Eurovision musical contest that is due to be held in Azerbaijan next year have had a very positive influence on the tourism sector of our economy. The share of this sector in the Azeri economy isn’t so great now, but it is deemed important for future development. However, it’s not so easy to make Azerbaijan attractive for foreign tourists. There are some problems for them in obtaining an Azeri visa, it’s not so easy to move around the country. Statistics indicate that the tourist services are overpriced. The Tourism Minister has recently asked air companies to review their pricing policies. Certain reforms could resolve all the above-mentioned problems.

- The average salary of Azeri workers in the processing industry is 3.34 times higher that the average salary in other fields. What could one do to eliminate this difference?

- There is only one way: to increase salaries in other fields. The salary of government employees can be increased by budgetary allocations while private employees could be paid better thanks to economic growth. Today the workers of private oil companies have higher salaries than those of state oil corporations. According to the statistics, a family of 4 people (2 adults and 2 kids) needs to spend some 740 manats per month – and that's two times higher that the average salary in our country.

On the other hand, the number of government employees in public schools and hospitals is higher than necessary, and it would be rational to cut it in half. However, that would cause social discontent and heighten the level of unemployment.

Interview by Ramin Naziev, Baku.

To be continued