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Akbar Novruz

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Azerbaijan's government has based its 2027 state budget projections on 4.4% real growth in the non-oil economy and an overall GDP expansion of 2.7%, reflecting its continued emphasis on economic diversification and reducing dependence on hydrocarbon revenues.

Deputy Finance Minister Himalay Mamishov presented the figures during a joint meeting of three committees of the Milli Majlis, where lawmakers discussed the draft law "On the State Budget of the Republic of Azerbaijan for 2027."

According to Mamishov, the government has incorporated several key macroeconomic assumptions into its calculations for the state and consolidated budgets.

These include an average annual crude oil export price of $65 per barrel, projected inflation of 5.3%, and an exchange rate of AZN 1.70 against the US dollar.

“In calculating the state and consolidated budgets for the coming year, macroeconomic forecasts have been taken into account—including an average annual export price of 65 US dollars per barrel of crude oil, an average annual inflation rate of 5.3 percent, and an exchange rate of 1.7 manats to the dollar. Furthermore, the projections are based on a real growth rate of 2.7 percent for the Gross Domestic Product (GDP) and 4.4 percent for the non-oil GDP,” the Deputy Minister added.

Government targets lower dependence on oil revenues

Mamishov said the ratio of the consolidated budget's non-oil primary deficit to non-oil GDP is projected to decline to 17.1% in 2027, representing an improvement of 1.7 percentage points compared with 2026.

The government intends to continue reducing this indicator over the medium term, targeting 13% by 2029 and 12% by 2030.

Meanwhile, the share of non-oil revenues in the consolidated budget is expected to increase to 64.5% next year, up 1.5 percentage points from the current year.

“The share of non-oil revenues in the consolidated budget will reach 64.5%—an increase of 1.5 percentage points compared to the current year—which serves as a key indicator of reduced dependence on oil. By the end of the medium-term period, this figure is projected to reach 70.4%,” Mamishov said.

The projections indicate that the government expects non-oil revenues to account for an increasingly significant share of public finances, even as oil and gas exports remain important to the country's economy.

Capital investment to account for nearly one-third of budget

The deputy minister also emphasised the investment-oriented structure of the proposed 2027 budget.

Capital expenditures are expected to account for 32.5% of total state budget spending, a proportion Mamishov described as considerably higher than that of other countries in the region.

The allocation reflects the government's intention to maintain substantial public investment alongside efforts to strengthen the non-oil economy.

Another notable development concerns the financial self-sufficiency of Azerbaijan's districts.

According to Mamishov, all districts are expected to cover their expenditures entirely through their own revenues in 2027, eliminating the need for state subsidies to district budgets for the first time.

“It is also a positive development that, in the coming year, all our districts will fully cover their own expenditures through their own revenues; thus, for the first time, there will be no districts remaining that are dependent on state subsidies. Meanwhile, an increase in the own revenues of the Nakhchivan Autonomous Republic has made it possible to reduce the subsidy allocated to the Autonomous Republic by 6.4% next year.”

The reduction in Nakhchivan's subsidy allocation is attributed to an increase in the autonomous republic's own revenues.