IMF: Azerbaijan requires annual fiscal adjustment of 1.2–1.6% of non-oil GDP

Azerbaijan's medium-term fiscal consolidation remains appropriate for ensuring intergenerational equity and external sustainability, Report informs referring to the International Monetary Fund (IMF).

"Staff estimates that a nonoil primary deficit (NOPD) of 6–6.5 percent of nonoil GDP would ensure constant real annuity across generations. Reaching it in around 10 years would require an annual fiscal adjustment of about 1.2–1.6 percent of nonoil GDP annually starting in 2026 - a pace of consolidation that is consistent with the authorities" hard fiscal rule target of reaching 13 percent of nonoil GDP in 2029.

These estimates are, however, subject to considerable uncertainty. This pace of consolidation requires that any revenue windfall from higher hydrocarbon prices relative to what is assumed in the budget and the medium-term fiscal framework should be saved. Combined with low current levels of debt to GDP, the envisaged consolidation contributes to low overall risk of sovereign stress and external sustainability," the IMF noted.