WB: Azerbaijan's current account surplus to exceed 11% of GDP in 2025

The World Bank (WB) forecasts the current account surplus in Azerbaijan at 11.6% of GDP in 2025, Report informs referring to the WB.

The bank expects this indicator to decline in the following years: 5.4% of GDP in 2026, 3.8% of GDP in 2027, 3.6% of GDP in 2028 and 3.4% of GDP in 2029.

Both the budget and current account are in surplus due to the high level of oil and gas revenues.

Driven by high levels of hydrocarbon revenues, the current account surplus is estimated at 14.9 percent of GDP and the budget surplus at about 4.1 percent of GDP on average over 2019-23.

"The tax revenue to GDP has been rising, from 14.5 percent in 2019 to 18 percent in 2023 supported by improvements in tax administration. Public expenditures averaged 33.2 percent of GDP in 2019-2023, including a substantial increase to cope with the impact of the COVID-19 pandemic. Expenditures have often been revised upwards from initial budget levels during the year, particularly when energy prices have been high, providing a strong procyclical thrust to fiscal policy," reads the report.

At the same time, high revenue collection from non-hydrocarbon sectors also allowed to reduce non-hydrocarbon primary balance predicated by the fiscal rule.

Reserves of the Central Bank of Azerbaijan (CBAR) increased to $11.8 billion by September 2024, which is sufficient to cover 5.7 months of total imports, compared to $6.3 billion at end-2019.

Furthermore, the value of the state oil fund (SOFAZ) grew to $58 billion by June 2024, providing a significant fiscal cushion against volatility.

According to the forecasts of the Azerbaijani government, the current account surplus of the balance of payments of Azerbaijan in 2025 is expected to be at the level of 5.6% of GDP. In 2025-2028, taking into account the forecasts for oil and gas production, the current account surplus, according to government estimates, will be about 3% of GDP per year.

The Central Bank of Azerbaijan forecasts the current account surplus at the level of $5.5 billion for 2025.

According to the results of nine months of 2024, the current account surplus of the balance of payments of Azerbaijan amounted to about $4 billion or 7.2% of GDP.