IMF Staff Completes 2026 Article IV Mission to Azerbaijan

IMF News, February 19, 2026

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An IMF mission led by Ms. Anna Bordon visited Baku during February 4-17, 2026 to review financial developments, economic outlook, risks, and policies for sustainable growth.
The mission met with senior government officials, representatives of the financial sectors, and international financial institutions.
End-of-mission statement emphasizes that views are those of IMF staff and do not necessarily represent the IMF’s Executive Board; staff will prepare a report for the IMF's Executive Board, subject to management approval.

Economic growth moderated to 1.4 percent in 2025, coming off elevated growth in 2024.
Hydrocarbon output declined considerably in 2025; nonhydrocarbon sector growth slowed amid indirect effects of falling hydrocarbon prices and normalization of investment.
Real GDP slowed to 1.4 percent, down from 4.2 percent in 2024.
GDP is expected to grow at 2.1 percent in 2026, amid continued weakness in oil and gas production and some acceleration of non-oil GDP growth, before moderating to 2 ½ percent in the medium term.
Inflation rose temporarily above the upper bound of the CBA’s inflation target range in 2025, then returned within the band in the second half of 2025. Inflation is projected to fall to 5.0 percent by end-2026 and to 4.0 percent by end-2027, assuming the unwinding of external inflationary pressures and continued fiscal consolidation.
The external position is expected to weaken with shrinking trade surpluses due to declining oil production, but the current account balance is still projected to remain positive in 2026-27.
The combined CBA and SOFAZ reserves increased from $70 billion at end-2024 to $85 billion by end-2025; reserves will continue to grow but at a slower pace.

Medium-term fiscal consolidation is judged appropriate to ensure intergenerational equity and support external sustainability.
A clear and comprehensive strategy identifying concrete revenue and expenditure measures will enhance the credibility of fiscal consolidation.
Recommended fiscal measures include: improving SOE profitability and reducing their subsidies, rationalizing tax incentives, and strengthening tax administration and compliance.
Gross National Savings and investment trends, and consolidated government finances, were presented in staff estimates and projections (see Selected Economic and Financial Indicators for detailed series).

Credit growth slowed considerably in 2025; banks remain well capitalized and profitable.
Maintaining the current countercyclical capital buffer calibration is appropriate given the slowdown in credit growth.
Implementation of the liquidity coverage ratio and planned introduction of the net stable funding ratio will support banking sector resilience.
Recent adoption of risk-based supervision, gradual adoption of Basel III, and enhancements to the financial safety net are expected to strengthen prudential oversight and public confidence.
To improve monetary policy passthrough and broader financial development, recommended priorities include: developing a risk-free yield curve, addressing dollarization, lowering operating costs, and increasing competition in the banking sector.
Diversification priorities: deepen capital markets to increase private sector access to finance, increase labor productivity through human capital investment, tackle labor market informality, reduce the role of regulated prices, and lower state subsidies to SOEs to stimulate competition and optimize SOE performance.

Growth moderated to 1.4 percent in 2025.
Real GDP: 1.4 percent in 2025; 4.2 percent in 2024 (narrative comparison).
GDP expected growth: 2.1 percent in 2026; 2 ½ percent in the medium term.
Inflation projections: 5.0 percent by end-2026; 4.0 percent by end-2027.
Combined CBA and SOFAZ reserves: $70 billion at end-2024; $85 billion by end-2025.
Consumer price index (period average) in staff table: 8.8; 2.2; 5.6; 5.2; 4.0 (series as reported).
Oil Fund Assets (in millions of U.S. dollars) (series as reported): 56,070; 60,031; 73,542; 74,458; 75,040; 75,516; 76,212; 77,180; 78,357.
Assumed oil price, WEO plus $2-$3 premium (in U.S. dollars per barrel) (series as reported): 82.6; 81.2; 69.7; 66.7; 64.9; 65.4; 66.4; 67.2; 68.5.
Gross official international reserves (in millions of U.S. dollars) (series as reported): 11,613; 10,959; 11,515; 10,688; 9,709; 8,904; 8,754; 8,599; 8,103.
Nominal GDP (in millions of U.S. dollars) (series as reported): 72,429; 74,426; 75,938; 77,922; 82,201; 87,183; 92,650; 98,451; 104,686.

IMF Staff statement: IMF Staff Completes 2026 Article IV Mission to Azerbaijan; February 19, 2026.