Azerbaijan.US
Azerbaijan’s 2026 state budget has been approved with a projected deficit of 3.1 billion manats, a figure authorities say reflects a deliberate fiscal policy choice rather than a sign of economic stress.
Under the budget law signed by President Ilham Aliyev, the deficit will be covered primarily through domestic borrowing, including the issuance of government debt securities by the Ministry of Finance. Officials and economists note that deficit spending is a common tool used by governments worldwide to support economic activity.
Experts point out that a fully balanced budget is possible only under two scenarios: significant cuts to public spending, including priority programs, or increased transfers from the State Oil Fund. Neither option is considered optimal in the current economic environment.
Economist Rashad Hasanov told Baku TV that Azerbaijan has previously ended budget years with smaller-than-planned deficits, often due to higher oil prices or delays in the implementation of certain expenditure programs. Similar adjustments, he said, remain possible in 2026 depending on revenue performance.
The budget framework also prioritizes so-called protected expenditures, ensuring that key social and state obligations are financed first. Other spending categories will depend on actual revenue inflows and the availability of deficit financing sources.
In addition to domestic borrowing, the government plans to finance the deficit through privatization proceeds, limited external borrowing, and the use of available balances in the Single Treasury Account as of January 1, 2026.
Economists stress that, under current conditions, the projected deficit does not pose a risk to fiscal stability and is intended to support continued economic growth rather than signal financial imbalance.
