Fitch Solutions: Azerbaijan gradually moving toward long-term fiscal sustainability

International analytical company Fitch Solutions says Azerbaijan is steadily transitioning toward long-term fiscal sustainability, with the share of non-oil revenues in the state budget expected to exceed 57% of total revenues in 2026.

According to Report, fiscal policy next year will follow a conservative approach aimed at gradually reducing dependence on oil revenues.

The government expects the state budget deficit to stand at around 1.9% of GDP in 2026, broadly in line with the 2025 level, the authors say, adding that both revenues and expenditures are projected to increase only slightly - by approximately 0.7% year-on-year - reflecting deliberate restraint amid ongoing uncertainty in global oil markets.

A key development highlighted in the report is the projected double-digit growth in non-oil revenues in 2026. This will be accompanied by an 11% reduction in transfers from the State Oil Fund of Azerbaijan, signaling a gradual move toward long-term fiscal sustainability.

In 2025, non-oil and gas revenues exceeded 20.3 billion manats, accounting for 51.9% of total state budget revenues. These revenues increased by 3.6% compared to 2024.

State budget revenues for 2026 have been approved at 38.609 billion manats, 0.7% higher than the approved figure for 2025, while expenditures are set at 41.7036 billion manats, also up 0.7%.

The share of non-oil revenues in the consolidated budget for 2026 will increase by 5 percentage points compared to the current year, reaching 63%. Projections through 2029 indicate that this figure could rise further to 69–70%.