President of Azerbaijan: "I can tell you that even with an oil price of $40 or $45 a barrel, which we have today, our economy will successfully function and our economy will be able to tolerate this level of price"

"Azerbaijan, perched on giant reserves of oil and gas, has had some of the world's fastest growth in recent years as its hydrocarbon production built up during the bull market for oil. The days of 30 percent annual gross domestic product growth were over after the oil price tumbled from a peak of $147 last year", said Aliyev.

"The fact that for the last five years, our GDP grew by 26 times, well I think that is a historical record", said the President. "Our forecast for this year is about 10 percent, which I think in the conditions of the global crisis is more than enough. And probably we will continue this level of development"

This week the European Bank for Reconstruction and Development (EBRD) cut its 2009 growth forecast for Azerbaijan to 8 percent from 15 percent, still the second best performer in the ex-communist region the bank covers, after Turkmenistan. The EBRD put Azerbaijan's 2008 growth at 10.8 percent.

President of Azerbaijan stated Azerbaijan's intention to cut production by 300,000 barrels per day to 540,000 bpd, which will be its lowest output level in two years, to help support world prices.

"We were planning to produce about 55 or 60 million tonnes a year (of oil) and now the programme is for 50 million tonnes for the year," he added and said Azerbaijan would continue cooperation with OPEC but Azerbaijan was not invited.

"To my mind this price is the best for everyone: this will be acceptable for consumers, this will be sufficient for companies to invest and for countries which receive profit from oil sales," he said.

"I can tell you that even with an oil price of $40 or $45 a barrel, which we have today, our economy will successfully function and our economy will be able to tolerate this level of prices. We have had even worse times as you remember.

Economists say Azerbaijan's economy is heavily dependent on oil and gas revenues and the country has not yet succeeded in diversifying away from this sector.

Aliyev said growth during the crisis showed the success of economic reforms but warned that the economy needed to be further diversified and vowed to push ahead with major infrastructure projects.

"In the future this will allow us not to think about the oil price. Oil should just be good insurance and money that we accumulated in the oil fund should be good protection from any kind of crisis."

Like Russia and Norway, Azerbaijan has set up a fund to keep oil revenues from distorting the economy and to use on long-term investment projects. It currently stands at $11.2 billion.

/Day.Az/