Azerbaijan expands support for citizens Social package 2025

A favourable global economic environment, with relatively stable energy market prices, coupled with strong growth in Azerbaijan’s non-oil sectors, has driven solid economic performance this year. Anticipated additional fiscal revenues have paved the way for increased social spending in the recently approved 2025 State Budget. 

Under a new decree by President Ilham Aliyev, the expanded social package is set to benefit approximately three million citizens. During the plenary session of the Milli Majlis (Parliament) on December 29, lawmakers discussed key aspects of the country’s social policy, including planned increases in wages, pensions, allowances, and other social measures.

State support for vulnerable segments of the population has long been a cornerstone of President Ilham Aliyev’s policies, with consistent efforts to enhance the social welfare of Azerbaijan's citizens becoming a defining feature of the country’s budgetary strategy. Notably, between 2019 and 2021, approximately 900 legislative acts were adopted to improve the social well-being of four million citizens, with an additional 6 billion manats ($3.5 billion) allocated for these reforms.

In early 2023 and 2024, Azerbaijan introduced its fourth and fifth social packages, which further increased the minimum pension, salaries, and various social benefits. These measures provided additional financial support to several million citizens, reaffirming the government’s commitment to improving living standards.

"Since 2018, social benefits and pensions in Azerbaijan have increased fivefold, and over the past six years, an additional 8.5 billion manats [$5 billion] have been allocated to social packages. This trend will continue in the coming year: in 2025, an additional 1.4 billion manats will be allocated for these purposes," said Vugar Bayramov, a member of the Parliamentary Committee on Economic Policy, Industry, and Entrepreneurship, during the plenary session of the Milli Majlis. 

According to the MP, in line with a recent decree by President Ilham Aliyev to continue improving the population's social welfare, a new social package has been launched, which will benefit a total of three million citizens.

As a reminder, according to a decree issued by the President of Azerbaijan about a week ago, titled "On the Continuation of Measures to Improve the Social Welfare of the Population," the minimum monthly wage will be set at 400 manats ($235) starting from January 1, 2025. Currently, the minimum wage stands at 345 manats ($202), meaning a growth rate of 16%. Additionally, starting from February 1, 2025, the minimum pension will increase by 14.3%, rising from 280 ($122) to 320 manats ($188). Overall, the new reform package will affect around three million citizens, including employees in state-funded sectors, pensioners, citizens receiving benefits, and students.

"Improving the well-being of the Azerbaijani people has traditionally been a priority of state policy in Azerbaijan. Socially oriented expenditures form the basis of the 2025 State Budget proposal: starting from January next year, the minimum living wage and the poverty threshold will be increased from 270 ($158) to 285 manats ($167), and compared to 2024, spending on social security and social protection will see a 9.6% increase," stated Finance Minister Samir Sharifov during his speech at a plenary session of Parliament in mid-December, when the law on the "State Budget of Azerbaijan for 2025" was adopted.

Overall, social expenditures across all sectors will account for more than 40% of the state budget for the coming year. "In order to develop modern education and improve public access to high-quality and advanced healthcare services, the state budget for next year also allocates more funds," said Azerbaijan's Prime Minister Ali Asadov in mid-December during the final budget hearings. The prime minister also emphasized that thanks to increased budget revenues, there will be sustainable improvements in social protection and the well-being of the population, including a continued focus on the families of martyrs and veterans, which will remain priorities of state policy.

Improvements in social sector funding will also extend to other areas. For instance, on December 27, the Parliament passed a new Article 3.5 of the "Labour Pensions Law," which provides for additional pension payments for employees of the diplomatic service and their family members based on years of service.

Overall, it is important to highlight that all current and planned social expenditures for the coming year are based on a solid financial foundation, ensured by the steady growth of the economy and increased budget revenues. According to the State Statistical Committee, from January to November 2024, Azerbaijan's Gross Domestic Product (GDP) surpassed 113.282 billion manats ($66.4 billion), growing by 4.1% compared to the same period last year. 

Moreover, the growth rate of GDP in the non-oil sector of the country's economy reached 6.4%. This positive trend was also reflected in the strong performance of government revenue: in the first eleven months of 2024, state treasury receipts amounted to over 34.056 billion manats ($20 billion), marking a 14.9% increase year-on-year. As a result, the budget surplus for the reporting period reached over 3.018 billion manats ($1.7 billion), or 2.7% of GDP, which is 6.2 times higher than the corresponding figures for January-November last year.

According to macroeconomic forecasts, the positive development trend in the economy is expected to continue in 2025. Real GDP growth is projected to reach 3.5%, bringing the total GDP to approximately 129.2 billion manats ($76 billion). This growth will contribute to improved funding for the country’s social programs—significant increases are expected in the budgets of the State Social Protection Fund (SSPF) and the Unemployment Insurance Fund (UIF).

As a reminder, in mid-December, during a plenary session of the Milli Majlis, the law on the SSPF budget for 2025 was adopted in its third reading. The fund’s revenues and expenditures are projected to exceed 7.676 billion manats ($4.5 billion), marking a 10.45% increase compared to this year’s figures. Meanwhile, the UIF budget for the coming year has been set at 260.7 million manats ($153 million), reflecting a 9.5% increase from the current year.