BAKU, Azerbaijan, July 8. Given Azerbaijan’s high dependence on oil revenues and projected decline in oil production, a credible long-term fiscal consolidation plan remains a necessity, Trend reports citing the International Monetary Fund (IMF).
the IMF report reveals that with the oil price projected to remain high, the medium-term fiscal outlook has improved but remains highly dependent on the oil price.
“In the baseline scenario with no policy adjustment, large‒though declining‒fiscal surpluses are projected in the medium term, with the nonoil primary deficit remaining broadly constant, at around 24 percent of nonoil GDP. Compared to the long-term Permanent Income Hypothesis (PIH)-consistent NOPB benchmark of 12.5 percent of nonoil GDP, this implies a policy gap of about 11.5 percent of nonoil GDP, underscoring the need for fiscal adjustment as the oil production and oil-related revenues gradually decline,” reads the report.
IMF notes that general government debt (inclusive of government guarantees issued to Agrarcredit) is projected to drop to 20 percent of GDP in 2022 and then to increase gradually to 30 percent of GDP by 2027.