Fitch forecasts Azerbaijan will cut non-oil deficit to 13% of GDP by 2029

Azerbaijan aims to reduce its non-oil deficit to 13% of GDP by 2029, Fitch Ratings said on January 20.

Arvind Ramakrishnan, Fitch’s EMEA sovereign ratings director, made the remarks during a webinar titled "Fitch on the Caucasus: Sovereign and Banking Sector Perspectives for 2026," Caliber.Az reports per local media.

Ramakrishnan highlighted that Azerbaijan introduced a budget rule in 2022, with the non-oil primary deficit as a key fiscal indicator relative to non-oil GDP.

“Since then, authorities have effectively outperformed this target. For example, in 2024, the indicator stood at 20.4% of GDP against a target of 24%. While this is positive, there is a lack of firm commitments, and targets have tended to shift,” he said.

He added that Fitch lacks clarity on the reasons for such changes, which could undermine confidence in the fiscal “anchor” over the medium term. “Nonetheless, authorities appear committed to improving this metric in line with IMF recommendations by at least 1.5 percentage points of GDP annually. The current goal is to reduce the deficit to 13% of non-oil GDP by 2029, and we believe authorities are determined to achieve it,” Ramakrishnan said.

Fitch also sees Azerbaijan’s public debt as a strength. As of 2025, government debt stood at just over 20% of GDP, well below the statutory ceiling of 30%, Ramakrishnan noted.

“This is a clear strength of Azerbaijan’s credit profile, and we see no reason for concern in this area,” he said.

According to official data, Azerbaijan’s public debt totalled AZN 25.365 billion ($14.5 billion) as of 1 October 2025, a 3.2% decline compared with the same period in 2024. Of this, AZN 17.047 billion was domestic debt, with external debt at $4.893 billion (AZN 8.318 billion). Domestic debt fell 0.8% year-on-year, while external debt dropped 7.7%.

By Aghakazim Guliyev