Fitch: Azerbaijan can avoid build-up of macroeconomic imbalances

Azerbaijan's 2027-2030 fiscal strategy, based around an oil price assumption of USD65/b, aims at reducing the non-oil primary deficit to 13% of GDP by 2029, down from the 18.6% actual deficit in 2025 and 22.2% in 2022, according to the statement by Fitch Ratings, cited by Report.

The agency believes that amendments to the fiscal framework, such as limiting the scope for changes to medium-term fiscal targets, and the government's objective to reduce SOFAZ budget transfers over the medium term, could help reduce pro-cyclicality of fiscal policy, by avoiding the build-up of macroeconomic imbalances, and improve policy predictability, as well supporting continued sovereign external asset accumulation.

Th agency expects that after rising to a projected 5.6% of GDP in 2026, the consolidated budget surplus will decline in 2027 reflecting lower oil prices, moderate growth in non-oil revenue, and relatively stable expenditure, as the government continues to prioritise defence and rebuilding of recovered territories.