STATE PROGRAMME ON POVERTY REDUCTION AND ECONOMIC DEVELOPMENT 2003-2005 AZERBAIJAN PROGRESSES TOWARD THE ACHIEVEMENT OF THE MILLENNIUM DEVELOPMENT GOALS PROGRESS REPORT – 2003/2004 BAKU – 2005 DECREE OF THE PRESIDENT OF THE REPUBLIC OF AZERBAIJAN on Approval of the State Programme on Poverty Reduction and Economic Development in the Republic of Azerbaijan for 2003-2005 The consistent reform program carried out in the Republic of Azerbaijan in recent years has helped to ensure economic development, gradual improvement of macroeconomic performance and improvement of the living standards in the country. Thus, in the period 1996-2002, Gross Domestic Product increased by 1.7 times, capital investment increased by 7.8 times, nominal monetary income of population increased by 3 times and average monthly wages and pensions increased by 5 times. There are improvements in other economic performance indicators. However, these ongoing efforts and achievements have not yet led to a sufficiently high level of economic development and the living standards of the population have still not reached international standards: part of population is still unemployed, minimum wages are not sufficient to meet the minimum subsistence level and a number of factors causing poverty have not been eliminated. In order to further strengthen social protection of the population for the near future, ensure poverty reduction in the country and implement necessary measures to meet the commitments of the 2000 United Nations Millennium Summit, I hereby decree: 1. The “State Program on Poverty Reduction and Economic Development in the Republic of Azerbaijan for 2003-2005” shall be approved. 2. The Ministry of Economic Development of the Republic of Azerbaijan shall be responsible for coordinating the implementation of measures set out in the State Program. 3. The Cabinet of Ministers of Azerbaijan Republic shall be responsible for taking steps to ensure the implementation of this Decree. 4. This Decree shall become effective from the date of signature. Heydar Aliyev President of the Republic of Azerbaijan Baku, February 20, 2003 N854 2 Combating poverty is one of the main priorities for us. Policies are carried out in this direction, and the level of poverty decreases year by year in Azerbaijan… From this viewpoint, we should work in close collaboration with international organizations. There should not be any poor people in Azerbaijan. Ilham Aliyev President of the Republic of Azerbaijan 3 Our task is to strengthen the struggle against poverty, reduce and in future completely eliminate poverty in Azerbaijan. Heydar Aliyev National Leader of Azerbaijan 4 Foreword As in many countries of the world, poverty in Azerbaijan represents a major obstacle to the sustainable development of society, and poverty reduction is one of the government’s key priorities. In order to achieve poverty reduction in the country and improve the living standards of the population, the National Leader of Azerbaijani people, Heydar Aliyev, approved the ”State Programme on Poverty Reduction and Economic Development” (SPPRED) on February 20, 2003 that includes, which sets out concrete policy actions in this regardto achieve these aims. It should be noted that poverty reduction programmes are being implemented in more than 70 countries throughout the world, and that 191 countries have undertaken to halve poverty by 2015, in line with the Millennium Declaration adopted in New York by the UN General Assembly in September 2000. Since the launch of the Programme, Azerbaijan has made significant progress in achieving the goals set out in the SPPRED, and also in defining theits country-specific Millennium Development Goals. The implementation status of the measures carried out under the Programme, and as well as their impact on the population’s welfare, have been regularly monitored by the SPPRED Secretariat, and were summarised in thelastannual report.Thisyear’sreportlooksattheachievementsandchallengesfor 2003/2004. Progress made in poverty reduction in the country has been achieved thanks to the active participation of, and cooperation between, the central and local executive bodies, and other relevant agencies, including international donor organizations, foreign and local NGOs, and civil society. I would like to express my profound gratitude to all of our partners for their valuable assistance in working towards the achievement of the goals; and also take the opportunity to invite them to join us in a new stage of cooperation, namely in the formulation and implementation of a Sustainable Human Development Programme, which will represent the next stage in the country’s efforts to achieve sustainable economic development and poverty reduction. Farhad Aliyev Minister of Economic Development 5 STATE PROGRAMME On Poverty Reduction & Economic Development 2003 – 2005 Progress Report – 2003/2004 6 TABLE OF CONTENTS Acronyms........................................................................................................................8 Introduction....................................................................................................................9 Chapter 1. SPPRED and the MDGs........................................................................... 10 Chapter 2. Poverty monitoring................................................................................... 17 Chapter 3. Economic Development and Employment Growth............................ 64 Chapter 4. Social Policy and Human Capital Development................................. 86 Chapter 5. Regional Policy and Infrastructure Development.............................. 111 Chapter 6. Institutional Reforms and Capacity Building...................................... 124 Chapter 7. The Participatory Process......................................................................... 138 Appendices: Appendix 1. MDGs Report.......................................................................................... 147 Appendix 2. Medium Term Expenditure Framework (MTEF) for 2003-2005 .. 166 Appendix 3. Main socio-economic indicators......................................................... 176 7 ACRONYMS: ADB Asian Development Bank MPR Millennium Project Report AIDS Acquired Immune Deficiency Syndrome MTEF Medium Term Expenditure Framework ARRA Agency for Rehabilitation and Reconstruction of MYST Ministry of Youth, Sports and Tourism Liberated Areas NB National Bank AZM Azerbaijan National Currency (Manat) NGO Non-government Organization BTA Baku-Tbilisi-Arzurum main gas export pipeline NHDR National Human Development Report BTC Baku-Tbilisi-Ceyhan main oil export pipeline ODA Official Development Assistance CEDAW Convention on the Elimination of All Forms of OECD Organization for Economic Cooperation and Discrimination against Women Development CIS Commonwealth of Independent States PIP Public Investment Programme CM Cabinet of Ministers PMU Poverty Monitoring Unit DOTS Directly Observed Treatment Short Course PPP Purchasing Power Parity EBRD European Bank for Reconstruction and Development PRSP Poverty Reduction Strategy Paper EC European Commission AR Republic of Azerbaijan ECCD Early Childhood Care and Development RHS Reproductive Health Survey EPI Expanded Programme on Immunization SAP Strategic Action Plan EU European Union SCC State Customs Committee EU TACIS European Union Technical Assistance to the SCRIDP State Committee for Refugees and Internally Commonwealth of Independent States Displaced Persons EUIP Ecologically Urgent Investment Projects SCWI State Committee on Women’s Issues FAO Food and Agriculture Organization SDFDP Social Development Fund of IDPs FSIS Food Security Information System SES State Employment Service FDI Foreign Direct Investment SFD Saudi Fund for Development FSP Food Security Programme Sida Swedish International Development Agency GDP Gross Domestic Product SME Small and Medium Enterprises GEF Global Environment Facility SOCAR State Oil Company of Azerbaijan Republic GTZ German Society for Technical Assistance SOFAR State Oil Fund of Azerbaijan Republic HBS Household Budget Survey SPPRED State Programme on Poverty Reduction and HIV Human Immune Deficiency Virus Economic Development IBTA Institutional Building for Technical Assistance SPSS Software Package for Social Sciences IDP Internally Displaced Person SSC State Statistical Committee IFC International Finance Corporation SSPF State Social Protection Fund IFI International Financial Institution TB Tuberculosis ILO International Labour Organization UN United Nations IMF International Monetary Fund UNDP United Nations Development Programme IOM International Organization for Migration UNEP United Nations Environment Programme IsDB Islamic Development Bank UNFPA United Nations Population Fund JSA Joint Staff Assessment UNHCR United Nations High Commissioner for Refugees KfW German Bank for Development UNICEF United Nations International Children's Emergency LFPR Labour Force Participation Rate Fund LFS Labour Force Survey UNIFEM United Nations Development Fund for Women LSSRIDP Living Standards Survey of Refugee and IDP USAID United States Agency for International Development Population USD United States Dollars MDG Millennium Development Goal USTDA United States Trade and Development Agency MENR Ministry of Ecology and Natural Resources WB World Bank MFE Ministry of Fuel and Energy WFP World Food Programme MICS Multiple Indicator Cluster Survey WHO World Health Organization MLSP Ministry of Labour and Social Protection of the WTO World Trade Organization