BAKU

Azerbaijan’s parliament has passed the state budget for 2022 based on an average oil price of $50 per barrel that sees increased revenues and expenditures compared to this year’s main financial document.

The state budget projects revenues at 26.816 billion manats ($15.774 billion), 10.2 percent up from revenues expected this year. Expenses are projected at 29.879 billion manats, 4.7 percent up from this year’s spending.

In the structure of revenues, 12.710 billion manats or 47.4 percent of total revenues are transfers from the State Oil Fund SOFAZ. The bulk of revenues, 54.8 percent of the total amount, is projected to be provided through income from the oil and gas sector.

In the structure of expenditures, 4.263 billion manats are current expenses, 4.490 billion manats – defence spending, 3.566 billion manats – social spending, 1.789 billion manats – healthcare.

Capital investments in the economy are projected at 2.790 billion manats in 2022, 1.6 percent down from the level expected in 2021.

The government plans to keep the state debt in a range of 18 billion manats till 2026, but its size to GDP is expected to decline to 19.3 percent in 2025 from 24.4 percent in 2021.

The budget projects a deficit of 3.5 percent of gross domestic product (GDP). The budget for this year is based on the oil price at $40 per barrel, while the deficit is expected at 2 percent of GDP.

The country projects economic growth next year at 3.9 percent compared to the 5.1 percent growth expected this year.

A jump in the oil sector, to 4.6 percent, is expected in 2023 due to oil output from the Central East Azeri oilfield and the peak of gas production and export from the second stage of the major Shah Deniz project.

According to updated forecasts, the country’s oil sector is projected to amount to 31.9 percent of GDP (27.9 billion manats) in 2022 with declines to 30.2 percent in 2023, 29 percent in 2024 and 27.1 percent in 2025.

Annual inflation is expected to decline to 4 percent next year from 6 percent expected in 2021. The trend of slowing inflation rates is expected to continue in 2023-2025.