Azerbaijan Runs 4.2% Budget Surplus, World Bank Says

Azerbaijan's economy grew 1.2% in January to August 2026, with non-oil output up 2.1% and the hydrocarbon sector down 0.8%, according to the World Bank's Azerbaijan Monthly Economic Update for October 2026. CBJ covered the headline growth forecasts in its report on the World Bank's October outlook for the region. This article looks at the fiscal and price detail in the monthly update.

Budget in surplus

The state budget ran a surplus of AZN 3.7 billion in January to August, 4.2% of cumulative GDP, the update says. The consolidated balance, which includes the State Oil Fund (SOFAZ), was a surplus of AZN 5.8 billion, or 6.6% of GDP. Non-oil tax revenue rose 12.3% and made up 55.2% of consolidated revenue. Public debt stood at 17.9% of GDP at the end of August, down from 20.1% at the end of 2025.

The non-oil share matters because the government's own planning rests on it. CBJ reported that the 2027 to 2030 budget framework assumes oil at $65 a barrel.

Prices and the central bank

Annual inflation was 5.7% in August, inside the central bank's 4% plus or minus 2 percentage points target band, with food prices up 7.2%, services 5.0% and non-food goods 3.7%. In September the central bank held its refinancing rate at 6.5% and cut the lower bound of its interest rate corridor to 5.0% to support interbank lending, the update says. The manat remains de facto pegged at 1.70 per US dollar.

Reserves and investment

Central bank official reserves were a record $15.3 billion on 1 September, up 35.8% on the year, after the bank bought $1.5 billion from the market in August alone. Combined reserves of the central bank and SOFAZ were near $91 billion on 24 September. Fixed investment rose 10%, concentrated in oil and gas, while non-oil investment grew only 1.4%.

The drag is easing, but slowly

Growth of 1.2% compares with 1.0% in the same period of 2025 and 1.4% through July 2026, the World Bank said. The hydrocarbon sector's 0.8% contraction is milder than the 2.1% contraction of a year earlier, and industrial output was down 0.4%. Non-oil growth of 2.1% is below the 2.6% of last year, so the non-oil sector is the part that has lost momentum.

What to watch

• Whether non-oil growth, now 2.1%, accelerates beyond the 2.6% of last year, or keeps slipping.
• Food-price inflation of 7.2%, which is the main reason headline inflation sits near the top of the target band.
• The gap between 10% total investment growth and 1.4% non-oil investment growth, which shows how much capital still flows into hydrocarbons.

Sources: World Bank, Azerbaijan Monthly Economic Update, October 2026