## REPUBLIC OF AZERBAIJAN Government Finance Statistics and Public Sector Debt Statistics Mission (March 11–17, 2025) – (April 28–May 2, 2025)

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---

### Summary of Mission Outcomes and Priority Recommendations
- Mission format and timing:
  - Remote segment: March 11–17, 2025 (via Zoom).
  - In-person segment: April 28 – May 2, 2025 (Baku).
- Mission objectives:
  - Provide an outline of GFS concepts for source data providers.
  - Assist MTEF Development Center staff in compiling annual GFS for general government (GG) for 2023.
  - Extend work on developing quarterly GFS and PSDS that support Fund surveillance.
  - Review progress since the last TA mission in 2024.
- Key outcomes:
  - Eliminated inconsistencies in the preliminary annual GFS questionnaire for 2023 compiled by source data suppliers (SOFAZ, SEA, SSPF, SAMHI).
  - Discussed classification of LEPLs: Karabakh Revival Fund (KRF), Mortgage and Credit Guarantee Fund (MCGF), State Agency for Housing (SAH), Social Services Agency (SSA).
  - Agreed data submission timetable:
    - GFS dataset for 2023 to be submitted to the IMF by end July 2025.
    - GFS dataset for 2024 (including several LEPLs) to be submitted by November 2025.
    - Authorities to investigate compiling quarterly data for 2024 to be examined by a subsequent mission tentatively penciled in for November 2025.
- Institutional and capacity recommendations:
  - Political support and adequate resourcing of the MTEF Development Center are critical to progress.
  - Establish a technical working group comprising MTEF Development Center, Budget Department, Treasury Department (TD) and Agency for Managing Public Debt and Financial Obligations (PDFLMA/AMPDFL) with MOF management support.
  - Continue engagement with CCAMTAC GFS-PSDS resident advisor for follow-up actions.
- Priority recommendations (Table 1):
  - July 2025: Submit annual GFS dataset for 2023 to IMF — Responsible: MTEF.
  - November 2025: Submit annual GFS dataset for 2024 to IMF to include several LEPLs — Responsible: MTEF.
  - March 2026: Compile an updated Public Sector Institutional Table to clarify what LEPLs should be brought into the EBF Sector — Responsible: MTEF.

### Detailed Technical Assessment and Action Plan
- Objective of action plan:
  - Further development of GFS data in Azerbaijan, using coverage and classification of the latest manual/guide, with improved capacity and efficiency.
- Selected actions and target completion dates:
  - Increase capacity and efficiency of the GFS team — As soon as possible/ongoing.
  - Finalize and transmit the 2023 annual GFS questionnaire to IMF STA — End July 2025.
  - Finalize and transmit the 2024 annual GFS questionnaire to IMF STA — End November 2025.
  - Review and include as many LEPLs as possible in the 2024 GFS return — End November 2025.
  - Develop time series on quarterly CG debt in conjunction with PDFLMA — End December 2025.
  - Develop updated PSIT to take account of LEPLs and other EBFs — End March 2026.
  - Maintain regular discussions with other bodies in Government on recording the amount of government securities held by them — Ongoing.
  - Explore and use supplementary data sources for GFS and PSDS — Ongoing.
  - Consider quarterly questionnaires to agencies for financial assets and liabilities to support GFS and PSDS compilation.

### A. Improving Quality of GFS — Background, Findings and Recommendations
- Background:
  - Azerbaijan provides annual GFS for GG and subsectors to IMF covering 2008−2022 in the IMF annual GFS database.
  - GFS are compiled using an Excel file containing source data, bridging sheets, and output tables.
  - Source data are a mixture of IFRS and IPSAS-based annual financial statements; MTEF Development Centre staff are compiling 2023 and will submit 2024 before year-end.
  - Treasury Department (TD) uses a cash-based accounting system but can produce budget execution reports on an accrual basis (prepared for parliament but not submitted to the IMF for surveillance).
- Findings — compilation issues:
  - Significant discrepancies at individual entity level were reviewed and reduced to near zero in all cases.
  - Common misclassification: net acquisition of non-financial assets transferred from the State Budget (SBSB) were often misclassified; correct treatment per GFSM 2014:
    - Such transfers should be classified as other “change in volume” and recorded as a notional capital transfer in revenue and as acquisition of non-financial assets on the expenditure side.
    - Example: State Agency on Mandatory Health Insurance receiving transfers of medicines or capital equipment — since the agency did not pay, these should not affect net lending/borrowing, but be classified as other change in volume.
    - Incorrect treatment led to over-declaration of expenditure without corresponding changes in financial accounts.
  - Other source of discrepancies: agencies including transfers received for free as part of other accounts payable — inconsistent with GFSM 2014; should be recorded as another change in volume.
  - After corrections, statistical discrepancies for each agency were further reduced and the MTEF team can compile and submit annual data for 2023 by end July 2025.
- Recommendations:
  - Authorities to submit GFS dataset for 2023 by end July 2025 to IMF’s Statistics Department.
  - Use accrual data available as a source for IMF returns and transmit accrual data to the Area Department for surveillance purposes.
  - Consult ongoingly with the mission and CCAMTAC GFS-PSDS resident advisor on source data and compilation issues.
  - Consider changes to enable more timely collection and dissemination of quarterly data (e.g., quarterly questionnaires for financial assets and liabilities to agencies).
  - Authorities to submit GFS dataset for 2024 by end 2025.
  - Authorities to gather quarterly information for LEPLs for 2025.

### B. Details of LEPLs Examined — Background and Findings
- Background:
  - Appropriate classification of LEPLs in line with GFSM2014 is key to expanding GG sector coverage and improving GFS comprehensiveness.
  - LEPLs can act in their own name, represent themselves legally, and own property.
  - Classification test: assess whether government provides a level of support without which the entity could not survive and/or government control over the entity — if either condition is satisfied, classify the body in the GG sector; otherwise treat as part of the public sector.
- Entities examined:
  - Karabakh Revival Fund (KRF).
  - Mortgage and Credit Guarantee Fund (MCGF).
  - State Agency for Housing (SAH).
  - Social Services Agency (SSA).
- Findings:
  - Most examined LEPLs rely on government support for activities and are likely under government control from a statistical viewpoint; therefore, they should be treated as extrabudgetary funds (EBF) in the central government (CG) subsector.
  - Net effect on net lending/borrowing expected to be relatively minor in many cases because these LEPLs receive all their funding from the State Budget (SB) in the first instance and those flows would be consolidated.
  - Inclusion requires recording LEPL-generated revenues and expenditures and will increase consolidation between sectors.
  - LEPLs discussed the possibility of providing estimates for quarterly data, with the understanding that agencies could revise data when more up-to-date information becomes available.
- Next steps:
  - Compile an updated Public Sector Institutional Table (PSIT) to clarify LEPL treatment — Target: End March 2026.
  - Include as many LEPLs as possible in the 2024 GFS return — Target: End November 2025.

### Classification of LEPLs as EBFs within the CG Sector
- Agreement from discussions:
  - These entities should all be included as EBFs as part of the CG Sector.
  - In most cases, the agencies receive a large majority, or all of their funding form the SB and are effectively carrying out government policy.
  - Example: MCGF is a state-owned non-commercial organization which channels low-cost funding to make mortgage accessible to citizens.
  - The board of trustees is appointed by the President of Azerbaijan indicating a significant degree of control.
  - For GFS purposes, the expenditure is already recorded for these agencies as it comes from the SB but would require necessary adjustments for consolidation at BCG and EBF level.
- KRF specific points:
  - A significant level of control is exercised by the Government over the KRF through appointments to the board.
  - Current management of the KRF’s activities is carried out by the management board consisting of three members – the Chairman and his two deputies.
  - The composition of the supervisory board was signed into law by the head of state which indicates a strong degree of government control over the KRF.
  - Given the level of control, the KRF should be treated as an EBF.
  - Government grants are already recorded in GFS; remaining private sector revenue and expenditure should be recorded at the EBF level.
  - Authorities undertook to supply the latest annual report for the KRF so that the GFS team can estimate the best approach for inclusion under the EBF subsector.

### Findings: Areas for Improvement (LEPLs)
- The mission advised the GFS compilation team to investigate other LEPLs that may have a significant impact on the GFS balances.
- Authorities should examine other LEPLs and try to identify those belonging to GG.
- Subsequent mission would review results and assist in finalizing the list of LEPLs to be classified as government entities.
- Recommendations (LEPLs / EBFs):
  - The LEPLs examined should submit financial information from their annual accounts for inclusion in the 2024 GFS dataset.
  - These LEPLs should also include quarterly information for inclusion starting in 2025.
  - The MTEF should investigate further examples of LEPLs that have significant revenue and expenditure.

### Initiating Dissemination of PSDS
- Quarterly dissemination readiness:
  - Statistics for quarterly dissemination of debt securities and loans for budgetary central government (BCG) are readily available for dissemination but pending the approval of the MOF management.
  - BCG data could be complemented by LEPLs or EBFs to expand coverage to the CG level.
  - Compilers need to be aware of consolidation issues and reconciliation of PSDS figures with GFS when compiling debt statistics in line with the Public Sector Debt Statistics Guide for Compilers and Users.
  - Suggested establishment of a working group consisting of PSDS and GFS compilers for reconciliation and reporting.
- Recommendations (PSDS):
  - Contact the World Bank to initiate reporting to the QPSD database.
  - Set up a PSDS working group to discuss and report on debt issues to the GFS working group.

### Officials Met During the Mission
- Jeyhun Aghayev — Deputy Director, MTEF
- Elnare Kazimova — MTEF
- Gunel Eliyeva — MTEF
- Anar Mehdiyev — MTEF
- Lamiya Karimova — SOFAZ
- Kamal Amirasalanov — SOFAZ
- Nigar Isgandarova — PDFLMA
- Kamil Aliyev — PDFLMA
- Parvia Maharramov — PDFLMA
- Sevinj Agayeva — State Social Protection Fund
- Farid Rasulov — State Social Protection Fund
- Laman Yusifzade — State Social Protection Fund
- Ramil Shamlizadeh — State Agency on Mandatory Health Insurance
- Dinara Pashayeva — State Employment Agency
- Elnara Ahmadova — State Employment Agency
- Gunel Huseynova — Karabakh Revival Fund
- Vusala Abasova — Karabakh Revival Fund
- Khayal Raqiboglu — Karabakh Revival Fund
- Konul Maksudova — Karabakh Revival Fund
- Nizami Mammadov — Karabakh Revival Fund
- Anar Mansurov — Central Bank of Azerbaijan
- Mehriban Janmammadova — Central Bank of Azerbaijan
- Javidan Akhmedly — Central Bank of Azerbaijan
- Huseynov Jeyhun — State Agency of Housing
- Aykhan Alasgarov — State Agency of Housing
- Kamran Huseynov — The Mortgage and Credit Guarantee Fund
- Mahira Aliyeva — The Mortgage and Credit Guarantee Fund
- Alishaha Kovarov — The Social Services Agency
- Zaur Novruzov — The Social Services Agency
- Mulayim Dadashova — The Social Services Agency
- Konul Yusifova — The Social Services Agency

*Source: TECHNICAL ASSISTANCE REPORT — SEPTEMBER 2025.*

### Section 1

### REPUBLIC OF AZERBAIJAN Government Finance Statistics and Public Sector Debt Statistics Mission (March 11–17, 2025) – (April 28–May 2, 2025)

### Summary of Mission Outcomes and Priority Recommendations
- Mission format and timing:
  - Remote segment: March 11–17, 2025 (via Zoom).
  - In-person segment: April 28 – May 2, 2025 (Baku).
- Mission objectives:
  - Provide an outline of GFS concepts for source data providers.
  - Assist MTEF Development Center staff in compiling annual GFS for general government (GG) for 2023.
  - Extend work on developing quarterly GFS and PSDS that support Fund surveillance.
  - Review progress since the last TA mission in 2024.
- Key outcomes:
  - Eliminated inconsistencies in the preliminary annual GFS questionnaire for 2023 compiled by source data suppliers (SOFAZ, SEA, SSPF, SAMHI).
  - Discussed classification of LEPLs: Karabakh Revival Fund (KRF), Mortgage and Credit Guarantee Fund (MCGF), State Agency for Housing (SAH), Social Services Agency (SSA).
  - Agreed data submission timetable:
    - GFS dataset for 2023 to be submitted to the IMF by end July 2025.
    - GFS dataset for 2024 (including several LEPLs) to be submitted by November 2025.
    - Authorities to investigate compiling quarterly data for 2024 to be examined by a subsequent mission tentatively penciled in for November 2025.
- Institutional and capacity recommendations:
  - Political support and adequate resourcing of the MTEF Development Center are critical to progress.
  - Establish a technical working group comprising MTEF Development Center, Budget Department, Treasury Department (TD) and Agency for Managing Public Debt and Financial Obligations (PDFLMA/AMPDFL) with MOF management support.
  - Continue engagement with CCAMTAC GFS-PSDS resident advisor for follow-up actions.
- Priority recommendations (Table 1):
  - July 2025: Submit annual GFS dataset for 2023 to IMF — Responsible: MTEF.
  - November 2025: Submit annual GFS dataset for 2024 to IMF to include several LEPLs — Responsible: MTEF.
  - March 2026: Compile an updated Public Sector Institutional Table to clarify what LEPLs should be brought into the EBF Sector — Responsible: MTEF.

### Detailed Technical Assessment and Action Plan
- Objective of action plan: Further development of GFS data in Azerbaijan, using coverage and classification of the latest manual/guide, with improved capacity and efficiency.
- Selected actions and target completion dates (Table 2 highlights):
  - Increase capacity and efficiency of the GFS team — As soon as possible/ongoing.
  - Finalize and transmit the 2023 annual GFS questionnaire to IMF STA — End July 2025.
  - Finalize and transmit the 2024 annual GFS questionnaire to IMF STA — End November 2025.
  - Review and include as many LEPLs as possible in the 2024 GFS return — End November 2025.
  - Develop time series on quarterly CG debt in conjunction with PDFLMA — End December 2025.
  - Develop updated PSIT to take account of LEPLs and other EBFs — End March 2026.
  - Maintain regular discussions with other bodies in Government on recording the amount of government securities held by them — Ongoing.
  - Explore and use supplementary data sources for GFS and PSDS — Ongoing.
  - Consider quarterly questionnaires to agencies for financial assets and liabilities to support GFS and PSDS compilation.

### A. Improving Quality of GFS — Background, Findings and Recommendations
- Background:
  - Azerbaijan provides annual GFS for GG and subsectors to IMF covering 2008−2022 in the IMF annual GFS database.
  - GFS are compiled using an Excel file containing source data, bridging sheets, and output tables.
  - Source data are a mixture of IFRS and IPSAS-based annual financial statements; MTEF Development Centre staff are compiling 2023 and will submit 2024 before year-end.
  - Treasury Department (TD) uses a cash-based accounting system but can produce budget execution reports on an accrual basis (prepared for parliament but not submitted to the IMF for surveillance).
- Findings — compilation issues:
  - Significant discrepancies at individual entity level were reviewed and reduced to near zero in all cases.
  - Common misclassification: net acquisition of non-financial assets transferred from the State Budget (SBSB) were often misclassified; correct treatment per GFSM 2014:
    - Such transfers should be classified as other “change in volume” and recorded as a notional capital transfer in revenue and as acquisition of non-financial assets on the expenditure side.
    - Example: State Agency on Mandatory Health Insurance receiving transfers of medicines or capital equipment — since the agency did not pay, these should not affect net lending/borrowing, but be classified as other change in volume.
    - Incorrect treatment led to over-declaration of expenditure without corresponding changes in financial accounts.
  - Other source of discrepancies: agencies including transfers received for free as part of other accounts payable — inconsistent with GFSM 2014; should be recorded as another change in volume.
  - After corrections, statistical discrepancies for each agency were further reduced and the MTEF team can compile and submit annual data for 2023 by end July 2025.
- Recommendations:
  - Authorities to submit GFS dataset for 2023 by end July 2025 to IMF’s Statistics Department.
  - Use accrual data available as a source for IMF returns and transmit accrual data to the Area Department for surveillance purposes.
  - Consult ongoingly with the mission and CCAMTAC GFS-PSDS resident advisor on source data and compilation issues.
  - Consider changes to enable more timely collection and dissemination of quarterly data (e.g., quarterly questionnaires for financial assets and liabilities to agencies).
  - Authorities to submit GFS dataset for 2024 by end 2025.
  - Authorities to gather quarterly information for LEPLs for 2025.

### B. Details of LEPLs Examined — Background and Findings
- Background:
  - Appropriate classification of LEPLs in line with GFSM2014 is key to expanding GG sector coverage and improving GFS comprehensiveness.
  - LEPLs can act in their own name, represent themselves legally, and own property.
  - Classification test: assess whether government provides a level of support without which the entity could not survive and/or government control over the entity — if either condition is satisfied, classify the body in the GG sector; otherwise treat as part of the public sector.
- Entities examined:
  - Karabakh Revival Fund (KRF).
  - Mortgage and Credit Guarantee Fund (MCGF).
  - State Agency for Housing (SAH).
  - Social Services Agency (SSA).
- Findings:
  - Most examined LEPLs rely on government support for activities and are likely under government control from a statistical viewpoint; therefore, they should be treated as extrabudgetary funds (EBF) in the central government (CG) subsector.
  - Net effect on net lending/borrowing expected to be relatively minor in many cases because these LEPLs receive all their funding from the State Budget (SB) in the first instance and those flows would be consolidated.
  - Inclusion requires recording LEPL-generated revenues and expenditures and will increase consolidation between sectors.
  - LEPLs discussed the possibility of providing estimates for quarterly data, with the understanding that agencies could revise data when more up-to-date information becomes available.
- Next steps:
  - Compile an updated Public Sector Institutional Table (PSIT) to clarify LEPL treatment — Target: End March 2026.
  - Include as many LEPLs as possible in the 2024 GFS return — Target: End November 2025.

*Source: TECHNICAL ASSISTANCE REPORT — SEPTEMBER 2025.*

### Section 2

### Section 2

### Classification of LEPLs as EBFs within the CG Sector
- Based on the results of the discussions with the representatives of LEPLs, it was agreed that these entities should all be included as EBFs as part of the CG Sector.
- In most cases, the agencies receive a large majority, or all of their funding form the SB and are effectively carrying out government policy.
- For example, the MCGF is a state-owned non-commercial organization which channels low-cost funding to make mortgage accessible to citizens.
- In addition, the board of trustees is appointed by the President of Azerbaijan which clearly indicates a significant degree of control over the entity.
- Along with receiving funding from the SB this places these agencies in the general government (GG) sector.
- For GFS purposes, the expenditure is already recorded for these agencies as it comes from the SB but would require the necessary adjustments for consolidation at BCG and EBF level.

- 17. In relation to a body that receives non-government revenue, such as the KRF, the issue of control remains a critical one for classification purposes.
  - It appears that a significant level of control is exercised by the Government over the KRF through appointments to the board.
  - It was noted that the current management of the KRF’s activities is carried out by the management board consisting of three members – the Chairman and his two deputies.
  - The composition of the supervisory board was signed into law by the head of state which indicates a strong degree of government control over the KRF.
  - While this is called a Fund, given the level of control that is exercised by government, it should be treated as an EBF.
  - As mentioned earlier, while Government grants would already be recorded in GFS, the remaining revenue from the private sector as well as their remaining expenditure would need to be recorded at the EBF level.
  - The authorities undertook to supply the latest annual report for the KRF so that the GFS team can estimate the best approach for the inclusion of the Fund under the EBF subsector.

### Findings: Areas for Improvement
- 18. The mission advised the GFS compilation team to investigate other cases of LEPLs that may have a significant impact on the GFS balances.
- Based on the work done by the mission, the authorities should examine other LEPLs and try to identify those belonging to GG.
- The subsequent mission would review the results and assist as necessary in finalizing the list of LEPLs, which should be classified as government entities.

### Recommendations (LEPLs / EBFs)
- The LEPLs that were examined during the mission should submit financial information from their annual accounts for inclusion in the 2024 GFS dataset.
- These LEPLs should also include quarterly information for inclusion starting in 2025.
- The MTEF should investigate further examples of LEPLs that have significant revenue and expenditure.

### Initiating Dissemination of PSDS
- 19. The statistics for quarterly dissemination of debt securities and loans for budgetary central government (BCG) are readily available for dissemination but pending the approval of the MOF management.
- The BCG data could be further complemented by the LEPLs or EBFs (as relevant) which would allow for expanding the sector coverage to the CG level.
- The mission also noted that when compiling debt statistics in line with the Public Sector Debt Statistics Guide for Compilers and Users, the compilers need to be aware of the consolidation issues and reconciliation of the PSDS figures with GFS.
- The mission suggested that a working group consisting of the PSDS and GFS compilers should be established for that purpose.

Recommendations (PSDS)
- Contact the World Bank to initiate reporting to the QPSD database.
- Set up a PSDS working group to discuss and report on debt issues to the GFS working group.

### Officials Met During the Mission
- Jeyhun Aghayev — Deputy Director, MTEF
- Elnare Kazimova — MTEF
- Gunel Eliyeva — MTEF
- Anar Mehdiyev — MTEF
- Lamiya Karimova — SOFAZ
- Kamal Amirasalanov — SOFAZ
- Nigar Isgandarova — PDFLMA
- Kamil Aliyev — PDFLMA
- Parvia Maharramov — PDFLMA
- Sevinj Agayeva — State Social Protection Fund
- Farid Rasulov — State Social Protection Fund
- Laman Yusifzade — State Social Protection Fund
- Ramil Shamlizadeh — State Agency on Mandatory Health Insurance
- Dinara Pashayeva — State Employment Agency
- Elnara Ahmadova — State Employment Agency
- Gunel Huseynova — Karabakh Revival Fund
- Vusala Abasova — Karabakh Revival Fund
- Khayal Raqiboglu — Karabakh Revival Fund
- Konul Maksudova — Karabakh Revival Fund
- Nizami Mammadov — Karabakh Revival Fund
- Anar Mansurov — Central Bank of Azerbaijan
- Mehriban Janmammadova — Central Bank of Azerbaijan
- Javidan Akhmedly — Central Bank of Azerbaijan
- Huseynov Jeyhun — State Agency of Housing
- Aykhan Alasgarov — State Agency of Housing
- Kamran Huseynov — The Mortgage and Credit Guarantee Fund
- Mahira Aliyeva — The Mortgage and Credit Guarantee Fund
- Alishaha Kovarov — The Social Services Agency
- Zaur Novruzov — The Social Services Agency
- Mulayim Dadashova — The Social Services Agency
- Konul Yusifova — The Social Services Agency

*IMF | Technical Report – Republic of Azerbaijan GFS and PSDS | Section 2*

---


_Source: https://www.imf.org/-/media/files/publications/tar/2025/english/tarea2025084-source-pdf.pdf_