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Azerbaijan announces budget protection plan as oil prices fall

Azer Amiraslanov, Chairman of the Milli Majlis Committee on Economic Policy, Industry and Entrepreneurship

26 January 2026 11:44 (UTC +04:00)

The inclusion of an average oil export price of USD 65 in Azerbaijan’s 2026 state budget reflects a cautious and conservative approach. Although a decline in oil prices below this threshold may create certain fiscal risks, Azerbaijan’s accumulated reserve funds, conservative budgeting framework, and policy of developing the non-oil sector make it possible to keep these risks at a manageable level, said Azer Amiraslanov, Chairman of the Milli Majlis Committee on Economic Policy, Industry and Entrepreneurship, in an interview with APA-Economics.

Amiraslanov noted that the consolidated budget is more sensitive to oil prices than the state budget. In 2026, 42.6% of state budget revenues, or AZN 16.4 billion, will be formed through revenues from the oil and gas sector. Of this amount, 78.1%, or AZN 12.8 billion, will consist of transfers from the State Oil Fund. These transfers are planned and executed as a fixed amount, regardless of oil prices. Oil prices can directly affect only 22% of oil-and-gas revenues, or AZN 3.6 billion, namely the receipts from the oil and gas sector collected through the tax authorities.

“The main objective of budget policy is to ensure medium- and long-term macroeconomic stability, while responding to short-term shocks. The reserve mechanisms against these risks are multifaceted. The first is the transfer mechanism from the State Oil Fund. The Oil Fund, which performs a savings function, is the main stabilization instrument for the budget. During periods of price volatility, fiscal stability is maintained through transfers. The second mechanism relates to increasing non-oil revenues, improving tax and customs administration, and reducing the shadow economy. These initiatives are aimed at decreasing the budget’s dependence on oil. Third, if necessary, optimizing non-priority expenditures may help maintain fiscal balance. Fourth, a prudent public debt policy—particularly a low debt burden and a manageable borrowing strategy—serves as an additional buffer against risks,” the Committee Chairman emphasized.