S&P expects surplus of Azerbaijan's state administration sector to continue in medium term

According to the forecasts of the international rating agency S&P Global Ratings, the surplus of the public administration sector of Azerbaijan in 2023 will be 3.9% of GDP against 6.1% of GDP in 2022.

Report informs, citing S&P report on confirmation of Azerbaijan's sovereign credit ratings that the surplus is projected at 2.6% in 2024, and at 1.4% in 2025.

The agency expects the surplus to continue over the medium term, gradually falling to balance by 2026 as spending increases, while the continued gradual decline in oil production will weigh on government revenues. The agency said that despite the rapid growth in natural gas production in recent years, it believes that the government revenues from this source will remain significantly lower than from oil.

For example, even with much higher gas market prices last year, gas revenues were about $1bn (1.3% of GDP) compared to $10 billion (13% of GDP) from the sale of oil from the Azeri-Chirag-Guneshli field, according to S&P.

The agency's analysts believe that Azerbaijan's net fiscal assets retain a strong position, reflecting its external position and supporting the sovereign ratings.