## REPUBLIC OF AZERBAIJAN — Report on National Accounts Mission, February 17 – 28, 2025

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**Canonical URL:** [REPUBLIC OF AZERBAIJAN — Report on National Accounts Mission, February 17 – 28, 2025](https://www.imf.org/-/media/files/publications/tar/2025/english/tarea2025073-source-pdf.pdf)

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### Summary Of Mission Outcomes and Priority Recommendations
- A CCAMTAC technical assistance mission visited Baku during February 17 – 28, 2025, as a follow-up to the April 2024 CCAMTAC TA mission on national accounts.
- The mission assisted the State Statistical Committee of Azerbaijan (SSC) by reviewing the compilation of quarterly GDP by production (GDP-P) and expenditure (GDP-E) and provided recommendations for further improvement.
- The SSC compiled a chain-linked time series of quarterly GDP using benchmarking and the annual overlap technique as recommended in the 2017 IMF Manual on Quarterly National Accounts. Compilation of discrete time series of quarterly GDP-P and GDP-E is almost complete.
- The chain-linked time series is compiled using NACE Rev.2 and starts from 2010; during the mission the reference year was changed from 2010 to 2023, which reduced non-additivity in most recent years.
- Chain-linked quarterly GDP-E was re-referenced to 2023 during the mission. The mission reviewed the chain-linked time series of quarterly GFCF and recommended improvements to the commodity flow approach to reduce quarterly statistical discrepancies between GDP-P and GDP-E. Both time series will be available for publication after improvements.

Priority recommendations (Table 1):
- Target Date: September 2025 — When compiling quarterly GDP, use the same methods (if possible) as used for the compilation of annual GDP. — Responsible: SSC
- Target Date: November 2025 — Improve the commodity flow method by excluding machinery and equipment intended for final consumption. — Responsible: SSC

### Detailed Technical Assessment and Recommendations (Action Plan summary)
- Priority Action/Milestone — Target Completion Date — Selected items:
  - When compiling quarterly GVA, use alternative indicators (compensation of employees or VAT turnover) in activities with insufficient monthly/quarterly survey coverage (arts, entertainment, and other services). — April 2025
  - When compiling quarterly GDP, use the same methods (if possible) as used for the compilation of annual GDP. — September 2025
  - Publish chain-linked time series of quarterly GDP-P with the reference year 2023. — December 2025
  - Finalizing the compilation of time series of collective and individual consumption at current and constant prices. — April 2025
  - Breakdown of gross fixed capital formation to the gross fixed capital formation of government and non-government sectors. — September 2025
  - Compile the quarterly structure of construction according to the commodity flow of basic construction materials. — November 2025
  - Improve the commodity flow method by excluding machinery and equipment intended for final consumption. — November 2025
  - Publish chain-linked time series of quarterly GDP-E with the reference year 2023. — December 2025
  - Calculate the contributions of individual components to real GDP growth. — December 2025
  - Compile annual supply and use tables on a regular annual basis. — 2026-2027
- Priority coding: H – High; M – Medium.

### A. Quarterly GDP by Production — Current Situation and Methods
Findings:
- The SSC compiles first estimates of monthly GDP-P on a cumulative basis and publishes first estimates 15 days from the end of the reporting cumulative period.
- SSC compiles and publishes quarterly GDP-P that meet IMF SDDS requirements.
- Improvements needed in the currently published time series of quarterly GDP-P:
  - Replace NACE Rev. 1.1 with NACE Rev. 2.
  - Update base year 2005 to a more recent year.
  - Improve benchmarking by implementing the Denton extrapolation method via the XLPBM function developed by the IMF Statistics Department.
- The SSC updated the time series during the mission by re-referencing from 2010 to 2023; recommendations were provided for further improvements before publication.

Data sources and compilation methods:
- Annual and quarterly data are benchmarked using the XLPBM function. Chain-linked time series are compiled using the annual overlap technique recommended in the 2017 IMF Manual on Quarterly National Accounts.
- Discrete monthly data are available for industrial production index (SDDS-consistent), agriculture, trade, transport, and other services.
- In some services (arts, culture and recreation) monthly/quarterly data are very small and volatile relative to annual data; the mission recommended using alternative indicators (compensation of employees or VAT turnover).
- The mission recommended aligning quarterly methods with annual methods where possible; mismatch between volume extrapolation for annual GVA and direct deflation for quarterly estimates can cause significant differences at previous year's prices and sharp changes during annual adjustment.

Recommended Actions (A):
- When compiling quarterly GVA, use alternative indicators (compensation of employees or VAT turnover) in activities with insufficient monthly/quarterly survey coverage.
- When compiling quarterly GDP, use the same methods (if possible) as used for the compilation of annual GDP.
- Publish chain-linked time series of quarterly GDP-P with the reference year 2023.

### B. Quarterly GDP by Expenditure — Current Situation and Methods
Findings:
- The SSC compiled chain-linked time series of quarterly GDP starting from 2015 including: household consumption, government consumption, gross fixed capital formation (GFCF), changes in inventories, exports and imports of goods and services.
- Statistical discrepancy is entirely allocated to changes in inventories.
- Government consumption is compiled separately by collective and individual consumption but not disseminated in the same format; exports and imports of goods and services should be disseminated separately for goods and for services.
- Large statistical discrepancies cause very volatile quarterly changes in inventories. The mission identified the unreliable quarterly structure of GFCF as a main reason.
- GFCF structure: buildings and infrastructure account for more than 60 percent of total GFCF, making quarterly GFCF sensitive to the quarterly structure of construction services.
- Quarterly construction services and resulting GFCF are significantly influenced by government budget expenditures recorded on a cash basis, with a bulk of transactions occurring at the end of the year regardless of actual construction timing.
- For improving the quarterly structure of construction services and GFCF, the mission recommended measuring quarterly indicators based on dynamics of construction material flows:
  - Sum quarterly domestic production and net imports of main construction materials.
  - Divide annual GFCF for buildings and infrastructure by the quarterly structure of construction flows.
  - Extrapolate the next quarter by quarterly growth of construction flows.
- SSC uses the commodity flow method for quarterly GFCF for machinery and equipment; this method could be extended to include main types of construction materials. For machinery and equipment, exclude the part intended for final consumption.
- GFCF should be compiled by type of fixed assets in accordance with the format recommended in the 2008 SNA.
- On publishing changes in inventories: because they can be positive or negative and do not have volumes, it is not appropriate to publish them as a separate row in a chain-linked series; they could be combined with GFCF. Some countries publish changes in inventories as a separate contribution to real GDP growth. The mission demonstrated how to compile contributions of individual components to real GDP growth in a chain-linked time series.

Recommended Actions (B):
- Finalize compilation of time series of collective and individual consumption at current and constant prices.
- Break down GFCF into government and non-government sectors.
- Compile the quarterly structure of construction according to the commodity flow of basic construction materials.
- Improve the commodity flow method by excluding machinery and equipment intended for final consumption.
- Publish chain-linked time series of quarterly GDP-E with the reference year 2023.
- Calculate contributions of individual components to real GDP growth.
- Compile annual supply and use tables on a regular annual basis.

### C. Officials Met During the Mission
- Mr. Nuru Suleymanov — SSC — Head of NAD
- Ms. Alida Alpashayeva — SSC — Deputy head of NAD
- Ms. Parvin Huseynova — SSC — Chief advisor, NAD
- Ms. Sevinj Huseynova — SSC — Chief advisor, NAD
- Ms. Fidan Guluzade — SSC — Chief advisor, NAD

*Prepared by Levan Gogoberishvili, Statistics Department — IMF | CCAMTAC Technical Assistance Report – Republic of Azerbaijan, National Accounts Mission, JULY 2025*

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_Source: https://www.imf.org/-/media/files/publications/tar/2025/english/tarea2025073-source-pdf.pdf_