Socioeconomic life of Azerbaijan in 2019 - REVIEW

Socioeconomic life of Azerbaijan in 2019 - REVIEW The outgoing year 2019, unlike the previous ones, was rich in socioeconomic events in Azerbaijan and was marked as the year of reforms. Presidential administration, Cabinet and other state bodies underwent staff and structural changes, financial welfare of the population and business was improved, and new big enterprises and infrastructure facilities were opened. Remarkable developments happened beyond the country too. Below is Report's review of the socioeconomic developments in the country in 2019:
December 30, 2019 12:30
Socioeconomic life of Azerbaijan in 2019 - REVIEW

The outgoing year 2019, unlike the previous ones, was rich in socioeconomic events in Azerbaijan and was marked as the year of reforms. Presidential administration, Cabinet and other state bodies underwent staff and structural changes, financial welfare of the population and business was improved, and new big enterprises and infrastructure facilities were opened. Remarkable developments happened beyond the country too. Below is Report's review of the socioeconomic developments in the country in 2019:

Energy sector

The State Oil Company of Azerbaijan (SOCAR) has been the driving force of the country's economy this year, with the inauguration of the SOCAR Carbamide Plant and the launch of Azerbaijan's carbamide export to Europe and Latin America. Agroleasing OJSC is the plant's customer domestically.

Besides the Carbamide Plant, SOCAR Polymer LLC commissioned its high-density polyethylene plant and started exporting its products to Russia. Turkey's Tekfen company acquired a 10% stake in SOCAR Polymer, including 5% from SOCAR and 5% from PASHA Holding LLC.

Moreover, SOCAR supplied 11 LPG tanks to Heydar Aliyev Oil Refinery as part of its modernization and reconstruction process. A Satti self-elevating floating drilling rig was delivered to Baku under the agreement between SOCAR and Kazakhstan's KazMunayGaz.

The year 2019 also saw the launch of the European connection of the Trans Anatolian Natural Gas Pipeline (TANAP), marking a step towards the transportation of Azerbaijani gas to Europe. Its opening ceremony was held in Ipsala, Edirne, Turkey. Meanwhile, a ground-breaking ceremony for another project - the Bulgaria-Greece Interconnector - was held near the village of Kirkovo, Bulgaria. The pipeline will enable Azerbaijan to transport its gas to Bulgaria.

Planning to export its gas to Europe, the Azerbaijani government increased the annual consumption limit for the Azerbaijani population from 1,700 to 2,200 cubic meters.

This year, Hungarian MOL company has acquired a 9,6% share in Azeri-Chirag-Guneshli (ACG) block of fields, and an 8,9% share in Baku-Tbilisi-Ceyhan (BTC) pipeline, both owned by Chevron.

The year 2019 was remarkable in terms of electric energy: the North-2 power station, Mushfig və Zabrat substations were launched in Baku, Azerbaijan, and Georgia connected their grids through optic cables, and Azerbaijan started exporting electric power to Europe.


2019 witnessed an improvement in the financial welfare of the Azerbaijani population, with the minimum salary and pensions for the first time exceeding the subsistence minimum. In line with the order signed by President Ilham Aliyev, the lower limit of the wages rose from AZN 130 to AZN 250, and the lower end of pensions from AZN 116 to AZN 200. The growth in salaries covered 1 million people in the state sector and 350,000 people in the private sector. This step cost the state nearly AZN 2 billion. Meanwhile, as many as 750,000 people were embraced by the growth in pensions, which caused an increase of AZN 450 million in state budget spending. With the benefits also rising, all these social packages covered 4.2 million people and formed an additional financial burden of AZN 3.9 billion in a year.

The government also solved the problems of those affected by 2015 manat devaluation. Upon the President's decree 'On Additional Measures to Solve Problematic Loans of individuals in the Republic of Azerbaijan,' the state repaid a part of the loans below $10,000, which rose due to devaluation. The process covered 900,000 people. Of them, 600,000 were offered to receive state compensation, and 300,000 - to sign a new loan agreement in the national currency with an annual interest rate of 1% for five years.  AZN 645 million was paid to citizens in compensation within a year. Loan of AZN 242 million of 123,000 borrowers was restructured in a concessional conditions. AZN 205 million interests and penalty interests were written off, credits of 42,000 borrowers üere liquidated. With this step, which brought the financial burden to over AZN 1 billion, Azerbaijan demonstrated a more systematic and comprehensive approach to the solution of the trouble loans among other post-Soviet countries, taking into consideration the interests of the population at high level, as well as providing support to the banking sector. 

While no bank was shut down in 2019, the Financial Markets Supervisory Authority (FIMSA) canceled the licenses of 16 credit unions, one non-banking credit institution (NBCI), and granted permits to three NBCIs.

As for the insurance sector, the French AXA Group (AXA Mbask Insurance Company), which was operating on non-life insurance, left the market in 2019. The number of life insurance companies rose from three to four after a license was granted to Xalg Life Insurance OJSC. Meanwhile, a permit for Mega Life Insurance was delayed until next year. Moreover, payments of compensation to martyrs' families by the State Insurance Commercial Company (Azersigorta) and temporary suspension of some insurers, including Azerigorta, were among the noticeable events in 2019.

Novelties were also marked in the securities market. For the first time on record, the Black Sea Trade and Development Bank (BSTDB) issued a bond in the national currency of Azerbaijan. Moreover, the Baku Stock Exchange updated its listing rules. With this, some banks saw their stocks on the listing, while others passed on to a higher stock market segment. The International Bank of Azerbaijan (IBA) decided to pay dividends to its shareholders after a long-time break. The privatization of the bank did not happen this year, either.

2019 was also marked by the simplification of licensing exchange operations. Limitations on inspections in the financial markets were canceled.

With FIMSA abolished, its powers were transferred to the Central Bank of Azerbaijan (CBA). Claims about the merging of the Azerbaijan Deposits Insurance Fund (ADIF) with the CBA proved unjustified. ADIF made concessions to citizens having unsecured deposits of nearly $10,000 in banks, in which the Fund was a liquidator. So, the creditors achieved their goal after a three-year struggle. The period of full insurance of deposits was extended to one more year.

During the reporting period, CBA reviewed the interest corridor eight times. It reduced the discount rate from 9.75 to 7.5%, the upper limit of the interest corridor from 11.75% to 9.25%, and the lower limit from 7.75% to 5.75%. The bank slightly increased the currency reserves and monetary base in the country, renewed AZN 10 banknotes, issued the jubilee banknotes on the occasion of the 100th anniversary of Baku State University and the 20th anniversary of the State Oil Fund of Azerbaijan (SOFAZ).

Meanwhile, SOFAZ executive director Shahmar Movsumov was appointed as Head of the Department of Economic Issues and Innovative Development Policy of the Presidential Administration, and his deputy Israfil Mammadov became the SOFAZ Executive Director. The fund's assets exceeded $40 billion for the first time, which prompted an increase in Azerbaijan's currency reserves to over $50 billion after a four-year pause.


In 2019, Azerbaijan ranked 34th in the World Bank's Doing Business Report and became one of the top 20 reformers in the world. At the same time, it took several steps for the development of micro, small, and medium businesses. As of staff and structural reforms, Minister of Economy Shahin Mustafayev was appointed as the Deputy Prime Minister, Minister of Taxes Mikayil Jabbarov as the Minister of Economy, Chairman of State Committee on Property Issues Kerem Hasanov as the Head of the Department of State Control Affairs of the Administration of the President. The Ministry of Taxes and State Committee on Property Issues were abolished, their powers entrusted to the Ministry of Economy.

President Ilham Aliyev confirmed the Rule on State Support for domestic market research to stimulate the competitive performance of Micro, Small and Medium Enterprises (MSMEs). This step allowed people in business to get nearly AZN 20,000 in state support. Moreover, the country created a single state procurement portal and started developing a single state-business e-registry started, improved the Tax Code and launched the operation of the Tax Ombudsman institution.

The steps on support to business also covered the State Customs Committee (SCC). The Green Corridor system was launched, and an e-queue was applied at the customs checkpoints. Moreover, a new bridge across the Samur River was opened at the Azerbaijan-Russia border.

The reporting period was marked by the launch of the e-mortgage and credit guarantee system, the cancellation of requirement for the state guarantee for loans borrowed by entrepreneurs, the creation of a mobile court for business people, and commercial courts.

The number of Azerbaijan's trade houses abroad reached seven, and the number of wine houses was brought to three, after the trade houses were opened in Dubai, UAE, and a wine house in Yekaterinburg, Russia. Meanwhile, Ukraine opened its Trade House in Baku.


In 2019, the government stayed focused on the development of the sector. It decided to establish an Industrial District in the Sharur district and Biyan Industrial Park in Agdash.

Moreover, ground-breaking ceremonies took place for a commercial plant to manufacture special-purpose vehicles in the Hajigabul Industrial District on the project under joint implementation by Azermash OJSC and Russia's GAZ-Group company, and a plant to manufacture bus and trucks as part of the project implemented jointly with Iran's Gartal company. Construction of a Russian plant to produce Polystyrene isolation products in the district took off.

Furthermore, the Diamed Co syringe production plant and the Azerbaijan-Russia joint venture R-Pharm were commissioned in Pirallahi Industrial Park. The two countries also laid the foundation of the helicopter maintenance and service center in Zabrat Airport, Baku.

Other achievements include the launch of furniture exports to the United States from the Balakhani Industrial Park, discovery of new copper and gold deports in Azerbaijan by Anglo-Asian Mining, and opening of new Azerlhalcha branches in Gabala and Gobustan.


Azerbaijan continued reforms in the agrarian sphere in 2019. The Agency for Agrarian Services has been established based on the State Phytosanitary Control Service, the State Veterinary Service, the State Service for Registration of Plant Varieties and Seed Quality and the State Main Technical Supervision Service. This step made it possible to provide farmers with services on a 'single window' principle.

Moreover, the application of innovation in the agrarian sector has been extended. The electronic agricultural information system (EAIS) was launched, and a single database on farmers was formed. From next year, the subsidies will be allocated to farmers via EAIS's subsystem Subsidy Information System (SIS). Farmers will not be able to get subsidies if they are not registered with the system.

By the way, Azerbaijan has renewed the rules on the volume of subsidies. "Rules for subsidizing agricultural production," approved by President Ilham Aliyev, determined the sowing rate for different plants. From next year, these figures will be multiplied by the base amount (AZN 200) to define the subsidies.

Azerbaijan has also established a mechanism of agrarian insurance based on Turkey's practice. The statue of the Agrarian Insurance Fund has been approved this year.

Throughout the year, Agrarian Supply and Procurement OJSC started to implement Agro Action of Azerbaijani Women project called AFAQ. State Agro Trade Company LLC launched the implementation of the program 'from village to town.' Agro leasing OJSC provided services to farmers with an area of fewer than 50 hectares.

Azerbaijan gathered 3.2 million tonnes of grain this year, with food wheat making 2.3 million tonnes. Cocoon production has reached 634 tonnes, a record high in the past 21 years.

Meanwhile, cotton production has made up 295,000 tonnes, which is also a record since the adoption of the state program in 2016.

Other important innovations include the creation of farmer cooperatives, opening of newly-established Scientific Research Institute of Vegetable Growing, and production of potato and vegetable seeds complex in the Pirshagi settlement.


In 2019, significant innovations were observed in Azerbaijan's rwailway transport. Azerbaijan Railways launched a railway line from the center of Baku to Sabunchu settlement, and further to Pirshagi and new express trains were put into operation in this direction. A tunnel was built in order to provide movement of trains and cars without interfering with each other. The railway line from Pirshagi to Sumgayit (generally, Absheron Circle) will open in February 2020.

At the same time, the moving time of the Baku-Ganja express train was reduced from 4 hours 15 minutes to 3 hours 45 minutes by increasing the speed of the train to 135 km/h. The fare was decreased from AZN 15 to AZN 10 for ordinary seats, from AZN 50 to AZN 25 for business class. Works were launched to extend the route further to Agstafa. In parallel, construction of railway to Gabala continues, projection works started to build railway to Shahdag.

Two double-decker trains, assembled by the Swiss Stadler company, were brought to Azerbaijan in 2019, thus raising the number of such trains to nine. The Swiss company also supplied Azerbaijan with a passenger train to move on the Baku-Tbilisi-Kars line.

Baku Metro has completed the reconstruction of Khatai and Bakmil stations this year. Two ventilators were mounted at Gara Garayev and Memar Ajami stations, and two others between Ulduz and Nariman Narimanov stations. Moreover, Azerbaijan Railways imported six new trains (30 new wagons) from Russia's Metrovagonmash OJSC and signed an agreement with the company to buy twelve more trains (60 wagons). The sides also concluded a maintenance agreement on the trains.

An oil tanker built by Baku Shipbuilding LLC at the order of Azerbaijan Caspian Shipping Company JSCJ was put into operation, and 'Azerbaijan' ferry was commissioned in 2019.

Baku International Sea Trade Port CJSC started cooperation with Europe's leading logistics hubs, signed an agreement on the expansion of freightage from Europe to Central Asia and China, and started to create a digital platform jointly with Kazakh and Turkmen ports.

Azerbaijan's State Motor Road Agency commissioned Mardakan-Gala highway in Baku, and Mingechevir-Beylagan highway in the regions. The Baku Transport Agency opened the 'Koroglu' Transport Hub and launched the construction of bike trails.

2019 was marked by the creation of a mechanism for renting with the obligation to sell residential premises. This process was entrusted to the Mortgage and Credit Guarantee Fund. The State Housing Development Agency continued the sale of houses in the Yasamal residential Complex on concessional terms, bringing the number of families owning apartments to 1,385.

The State Committee on Property Issues inaugurated the Property Services Place. The Committee also started to issue references on the property electronically.

The State Committee on Urban-planning and Architecture electronized the procedure of issuing permits for construction and exploitation. Jointly with the State Agency for Citizen Service and Social Innovation under the President (ASAN Service), the Committee launched the 'E-portal,' which operates under the Single Window principle.

This measure minimized the contact between officials and entrepreneurs and reduced the period of obtaining permission for construction and exploitation. The Committee also continued work on the General Plan of Baku and involved AS+P urban planning company in this process.


The year 2019 was significant for Azerbaijan's tourism sector as well. The number of foreigners traveling to the country exceeded 3 million people, with the one-millionth visa issued to a French citizen. The Ministry of Foreign Affairs canceled the visa regime for Turkish citizens.

The State Tourism Agency performed considerable work in the sphere. The Agency created the Destination Management Organization in Shaki, Guba, Ganja, and Lankaran. It formed the Reserves Management Centre, which includes country's seven reserves , including 'Yanardag' State Historical-Cultural and Natural Reserve, Ateshgah State Historical-Architectural Reserve, Basgal State Historical-Cultural Reserve, Khinalig State Historical-Architectural and Ethnographic Reserve, Lahij State Historical-Cultural Reserve, Yukhary Bash State Historical-Architectural Reserve (including Sheki Karvansarai Hotel Complex) and the Kish State Historical-Architectural Reserve. A regional business environment tour was organized in 15 regions with the participation of more than 300 tourism companies and enterprises. Moreover, the Agency opened an office in Tbilisi, Georgia, thus bringing the number of tourism offices in foreign countries (Germany, UAE, Saudi Arabia, China, India, and Russia) to seven.

Other remarkable developments in the tourism sector included the sale of Baku Card for tourists, creation of the first wine route, improvement of tourism products based on Naftalan oil, Duzdag, and mud volcanos.


Azercosmos OJSC's second telecommunication satellite – Azerspace 2 - started its commercial activity. The company also signed a cooperation agreement with the Russian Satellite Communications Company (RSCC). According to the document, the two companies will introduce joint satellite communication and broadcasting services.

Azerbaijan, jointly with Kazakhstan, began to create a digital telecommunication corridor between Europe and Asia. The two countries started to lay a fiber-optic cable line through the Caspian Sea shelf. Moreover, Azerbaijan and Belarus signed a memorandum on communication. They used an e-signature to this end, marking the first such practice for the CIS.

Another remarkable innovation in Azerbaijan included the launch of a new service for cybersecurity, as well as PostPay e-wallet.


In 2019, the price of Brent crude traded in the world markets fluctuated between $55 and $75 per barrel, while the WTI crude price was at $45-65. It did not, however, calm the fears of OPEC and non-OPEC countries regarding oil prices. Oil producers extended the OPEC+ agreement on output cut until the end of the first quarter of 2020, increasing the figure from 1.2 million to 1.7 million barrels.

In the meantime, the investors showed greater demand for precious metals, including gold. As a result, the gold price exceeded $1,500 an ounce. 

The situation in the currency market has stabilized. The US Federal Reserve System reduced interest rates from 2.25-2.5% to 1.5-1.75% in several stages. The European Central Bank preferred to keep the interests stable, while Turkey reduced the interest rate from 24% to 12, and Russia from 7.75% to 6.25%. However, Georgia increased the interest rate from 6.5% to 9% to prevent depreciation of national currency as a result of tension in relations with Russia.

The slowdown in the US-China trade war was followed by a particular agreement between the two countries. The United States promised to reduce customs duty on the import of Chinese products, and China agreed to increase the purchase of US agricultural products. The process of Brexit has not been finalized this year, either. 

IMF Director Christine Lagarde was appointed the Chairman of the European Central Bank and Kristalina Georgieva, former chief executive of the World Bank, became the IMF Director.

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