A $5-$20 rise or fall in oil prices from the baseline forecast could affect Azerbaijan’s consolidated budget balance and the assets of the State Oil Fund of Azerbaijan (SOFAZ).
Report notes, citing the Finance Ministry’s Medium-Term Expenditure Framework for 2027-2030, that SOFAZ assets are projected to reach $73.9 billion by 2030 under the baseline scenario. Depending on oil price fluctuations, the fund’s assets could deviate from the baseline projection by about $0.9-$1.8 billion.
In 2027, the consolidated budget deficit is projected at 2% of GDP under the baseline scenario. Under alternative scenarios, the budget balance could deviate from the baseline by 1.4-2.7 percentage points.
The document said the oil and gas sector’s significant share of state budget revenues and exports meant that changes in energy prices and production volumes remained key factors affecting Azerbaijan’s fiscal and broader macroeconomic indicators.
A drop in oil prices below forecast levels could reduce oil and gas revenues, widen the consolidated budget deficit and lower SOFAZ assets.
However, the probability of oil prices falling below $65 per barrel next year is assessed as low, while fiscal risks stemming from oil price fluctuations are considered limited.
