"In 2025 and 2026, Azerbaijan’s fiscal policy is expected to remain supportive of economic growth while maintaining macroeconomic stability," says the country forecast released by Fitch Solutions, part of the Fitch Group, APA-Economics reports.
It was stated that government spending will continue to play a key role in stimulating domestic demand, particularly through increased public consumption and investment in infrastructure and social services: "Accordingly, we expect the fiscal deficit to average 1.1% of GDP in 2025 and 2026. It is worth noting that the country recorded four consecutive years of budgetary surplus in 2021-2024 and the deficit is a consequence of oil revenues falling.
The country operates a sovereign wealth fund, State Oil Fund of the Republic of Azerbaijan whose assets under management are estimated to be AZN106.6 bn or USD62.7 bn (62.0% of 2025 GDP). While there is no constitutional cap on the amount that the government can withdraw from the fund, the annual budget rule sets this cap. In 2025, the government is scheduled to withdraw AZN 14.5 bn from the fund to bolster fiscal revenues; the sustainability of such withdrawals is not of concern at present as the fund has grown at an average rate of 3.0% over the past two decades. Still, its close reliance to global energy price movements exposes the country to external risks at times of price shocks. The last time this happened was in 2015 when the CBA had to devalue the manat by 60.0%; this coincided with a 50.0% fall in global oil prices."
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