Continued fiscal consolidation is needed for cyclical reasons in 2025 and to ensure that future generations benefit from hydrocarbon wealth.
According to the International Monetary Fund (IMF), cited by Report, from the cyclical perspective, given robust economic growth and the projected positive output gap, fiscal easing is not appropriate in 2025.
"Instead, starting in 2025, an annual fiscal adjustment of about 1 ½ to 2 percentage point of non-oil GDP should be maintained for about 10 years until the NOPD approaches the estimated level that ensures real annuity across generations—currently estimated at 6 to 6 ½ percent of non-oil GDP," the fund noted.
It said that adhering to this consolidation plan, which is broadly consistent with earlier Presidential Decrees on the fiscal rule, would represent an important step towards intergenerational equity, ensuring that future generations benefit from Azerbaijan’s hydrocarbon wealth.
"Further revisions and backloading of fiscal adjustment would weaken the fiscal rule credibility and complicate efforts to preserve assets for future generations," the fund said.