RECORD CONSISTENCY

The government has established a tradition of setting and achieving new records in forming the state budget for the coming year, and this will continue in 2025. "This year's budget is at a record level. It is set to exceed ₼41 billion in expenditures. The consolidated budget has surpassed ₼48 billion. This marks a significant milestone in the country's financial history," President Ilham Aliyev stated in an interview with local television channels. He went on to add that this achievement was made possible solely through internal resources, transparency, effective management, and sound economic policy.

Principal Expenditure

In discussing the main economic document in the Milli Majlis (parliament), it was noted that it was prepared amidst declining revenues from the oil and gas sector while taking into account the need for sustainable growth in the non-oil and gas sector. "The budget aims to meet social needs and support economic sustainability. The Chairman of the Accounts Chamber, Vugar Gulmammadov, emphasised the positive growth dynamics in non-oil and gas revenues, forecasting that they will account for over half of budget revenues by 2025.

It is noteworthy that the initial version of the state budget for 2025 was ₼40 million less than the final adopted version. According to Azer Amiraslanov, Chairman of the Parliamentary Committee on Economic Policy, Industry and Entrepreneurship, the reasons for this "addition" were structural changes in the activities of entities receiving financial assistance from the state and consolidated budgets.

Accordingly, the state budget is expected to generate revenues of ₼38.356 billion in the coming year, representing a 5.4% increase compared to the approved forecast for 2024. Meanwhile, expenditures are projected at ₼41.407.6 million, marking a 4.2% rise. The deficit is forecast to be ₼3.051.6 million, representing a 9% reduction compared to the previous year. The consolidated budget is expected to generate revenues of ₼43.950.5 million, with expenditures amounting to ₼47.629.4 million.

Amiraslanov stated that if the state budget increases defence expenditures while external borrowing remains conservative and funding for strategic projects is sourced through internal resources, then a state policy based on national interests underlies this budget. It also serves to bolster national security, economic development, social welfare, and the reconstruction of Garabagh and East Zangezur, along with other state interests.

During the parliamentary consideration of the state budget, the government advised several public law legal entities to ensure their expenditures not primarily through the state treasury but rather by mobilizing their own revenue potential. As a result, approximately ₼159 million was freed up, which will be allocated to enhance Azerbaijan's defence and national security measures. As Finance Minister, Samir Sharifov reported that the total expenditure on defence and national security in the state budget for 2025 will reach ₼8 billion 555 million.

Azerbaijani Prime Minister Ali Asadov stated that ₼22 billion has been allocated from the state budget for reconstruction and construction works from 2020 to 2025 inclusive, with ₼4 billion earmarked for next year. Amiraslanov emphasised that the restoration and reconstruction of liberated territories is a top priority in the post-conflict phase. He added that the allocated funds will contribute to economic growth, development of the non-oil economy, and employment in the medium term.

Social Aspect

Azerbaijan's state budget is naturally characterised by its social orientation. The document provides for an increase in the minimum wage and minimum pensions, as is well known. Consequently, the average labour pension will reach ₼535, while pensions for age will amount to ₼571. The social package planned by the Azerbaijani government for this year is expected to cover approximately 3 million people. As Amiraslanov highlighted, the state's policy on population welfare is reflected not only in social expenditures but also across other areas. Consequently, ₼4.812 billion will be allocated from the state budget to strengthen social protection for vulnerable segments of the population and social security expenditures—an increase of ₼420 million or 9.6% more than in 2024.

According to MP-economist Vuugar Bayramov, social expenditures in the state budget for 2025 are expected to amount to approximately $10 billion, which is 2.5 times greater than the social expenditures of Georgia and Armenia combined. He also noted that this year's social expenditures are expected to be 67% higher than Armenia's total budget expenditures. Compared to 2021, social expenditures have increased by approximately ₼5 billion. "If social expenditures were ₼12.2 billion after the end of the Patriotic War in 2021, they rose to ₼13.7 billion in 2022 and ₼15.5 billion in 2024; for 2025, they are planned at ₼16.9 billion. This represents an increase of ₼4.7 billion compared to 2021.

Oil Price

With regard to revenue generation, it is anticipated that revenues from the oil and gas sector will be nearly ₼750 million lower than in 2024. This is due to a combination of factors, including a decrease in the state budget price of Azerbaijani oil from $75 to $70 per barrel and the depletion of reserves in our oil fields.

Consequently, determining an oil price of $70 per barrel within the state budget raised some controversy due to unfavourable external conditions and negative forecasts related to potential geopolitical changes. MP-economist Tahir Mirkishili considers this figure realistic and closely aligned with international organizations' forecasts. He noted that these organisations also predict oil prices for 2025 to range between $70-80: "According to data from the Ministry of Finance, if prices drop to $60 (pessimistic outlook), oil and gas revenues would decrease by ₼340 million. I believe that even in this scenario, the government would have opportunities to manage risks." Regarding gas prices, he anticipates them to exceed $242, as indicated in the baseline scenarios. This discrepancy could potentially mitigate the impact of oil price volatility. The situations within the European Union and Chinese economies suggest a potential increase in demand for gas," he said.

However, Sharifov has indicated that reserve measures are being considered should oil prices fall on global markets.

In parallel, Economy Minister Mikayil Jabbarov highlighted that Azerbaijan's economy has witnessed substantial reductions in its reliance on the oil and gas sectors in recent years. The peak in oil production was reached in 2010 (50.8 million tonnes). In 2014, oil production was recorded at 42.1 million tonnes; in 2018 it fell to 38.8 million tonnes; by 2021 it was down to 31.6 million tonnes; and in 2024 production reached 29.2 million tonnes with Brent crude averaging around $80 per barrel. For comparison, in 2014 average oil prices were $99," Jabbarov noted.

The Minister also noted that while in 2014 revenues from the oil and gas sector amounted to $15.5 billion (66% of total revenues), it is projected that this will decrease to $10.5 billion (49%) in the revised budget for 2024. In 2025, state budget revenues from non-oil and gas sectors are expected to increase by approximately ₼924 million compared to 2024, ultimately exceeding half of total budget revenues.

Government officials and MPs are confident that the execution of the state budget this year will proceed smoothly.

The state budget is not merely an annual financial plan filled with economic indicators and figures; it serves as a reflection not only of the national economy but also of state policy itself. Budget indicators illustrate strategic goals and initiatives as well as political decisions made by governing bodies. Consequently, this year's focus remains on bolstering national economic strength and ensuring stable growth.