At a meeting held at the Cabinet of Ministers of the Republic of Azerbaijan, the draft state and consolidated budgets for 2027, the consolidated budget indicators for the following three years, as well as the concept and forecasts for economic and social development were discussed. The speech by Prime Minister Ali Asadov covered not only budget parameters, but also the macroeconomic situation, strategic challenges, social policy, the Great Return, and sectoral development programmes.
Orkhan Sadigov, Head of the Monitoring and Evaluation Division at the Center for Analysis of Economic Reforms and Communication (CAERC), stated that the key point of the speech was the alignment of financial resources with economic development targets for the upcoming period. According to him, amid regional geopolitical and global economic risks, the sustainable peace agenda, economic diversification, the reconstruction of the liberated territories, and preparedness for potential risks are being considered within a unified medium-term planning framework.
The draft new Socio-Economic Development Strategy for 2027–2030 and the Second State Programme on the Great Return have been prepared, discussed by the Economic Council, and submitted to the President. Once the new documents are approved, establishing a link between the budget, sectoral programmes, and measurable results will be important.
The average annual growth of the non-oil and gas sector in 2022–2026 is expected to be 5.1 percent. At the same time, in January–August 2026, overall GDP increased by 1.2 percent and non-oil and gas GDP by 2.1 percent, while oil and gas GDP decreased by 0.8 percent. The 10 percent increase in investment in fixed capital is a positive signal. This picture highlights the importance of translating investment into productivity and higher value added.
During the first eight months of 2026, the subsidisation of loan interest rates, support for transport and logistics costs, and compensation for certain export-related expenses were aimed at supporting economic activity.
According to O. Sadigov, strategic foreign exchange reserves of approximately USD 91 billion, external public debt of USD 4.5 billion as of 1 September (5.6 percent of projected GDP), and a foreign trade surplus of more than USD 10 billion during the first eight months of 2026 provide a positive picture of the country's external financial position. The fact that these reserves exceed external public debt by approximately 20 times indicates a significant buffer against external shocks.
Against the backdrop of annual inflation of 5.7 percent during the first eight months of 2026, average annual inflation for 2027 is projected at 5.3 percent.
The baseline budget scenario assumes an oil price of USD 65 per barrel. In 2027, GDP is projected to reach AZN 141 billion, with real growth of 2.7 percent, while the non-oil and gas sector is projected to grow by 4.4 percent. The projected increase in the share of the non-oil sector in GDP from an expected 72.5 percent by the end of 2026 to 82 percent by the end of 2030 demonstrates the scale of the diversification policy.
In 2027, state budget revenues are projected at AZN 39 billion 234 million, while expenditures are projected at AZN 42 billion 400 million. The deficit of AZN 3 billion 166 million is equivalent to 2.2 percent of GDP. Within the macro-fiscal framework, the fiscal rule, debt discipline, expenditure efficiency, and the sustainability of the assets of the State Oil Fund are taken as key principles.
O. Sadigov stated that the national expenditure priorities for 2027–2030 cover economic growth, defence and security, social protection, reconstruction and resettlement in the liberated territories, digital development and artificial intelligence, education and healthcare, as well as environmental protection and green growth. The broad range of priorities makes it necessary to ensure the efficient allocation of funds across programmes and to assess results in each area.
For 2027, the share of socially oriented expenditures in total budget expenditures is projected at 44 percent, and the Prime Minister's speech placed particular emphasis on the social protection of the families of martyrs, war veterans, and low-income families. At the same time, AZN 8.8 billion is envisaged for defence and national security, accounting for approximately 21 percent of total budget expenditures.
More than 93,000 people currently live, work, and study in the liberated territories. Within the framework of the Great Return, the return of former internally displaced persons to 47 settlements — 10 cities, 3 settlements, and 34 villages — has so far been ensured. At the same time, more than AZN 25 billion was allocated for the reconstruction of the liberated territories in 2020–2026. For 2027, AZN 3.4 billion is projected for this purpose.
The CAERC division head added that in 2025–2026, relevant state programmes were adopted in the areas of water, transport, agriculture, food security, tourism, as well as mining and metallurgy, and the main priorities in these areas were identified. At the same time, the 2027 state budget provides for sufficient funding to ensure the financial support of the investment-oriented strategy and state programmes.