{
  "title": "IMF Executive Board Concludes 2026 Article IV Consultation with the Republic of Azerbaijan",
  "publication": "IMF News, April 30, 2026",
  "sourceUrl": "https://www.imf.org/en/news/articles/2026/04/29/pr-26131-azerbaijian-imf-executive-board-concludes-2026-article-iv-consult",
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  "summary": "IMF Executive Board Concludes 2026 Article IV Consultation with the Republic of Azerbaijan",
  "publishDate": "2026-04-30",
  "sections": [
    {
      "heading": "Recent performance and inflation dynamics",
      "content": "- Real GDP: slowed to 1.4 percent in 2025, down from 4.2 percent in 2024.\n- Hydrocarbon sector: hydrocarbon GDP contracted by 1.6 percent in 2025 due to technical issues.\n- Nonhydrocarbon sector: growth moderated from 6.5 percent in 2024 to 2.7 percent in 2025.\n- Headline inflation:\n  - CBA target range: 4±2 percent.\n  - Temporarily breached the upper bound in April and May 2025.\n  - Oscillated within a 4.9 to 6 percent range since.\n  - Food price inflation: climbed to 8.2 percent yoy in October 2025, then moderated.\n  - Headline inflation picked up to 5.7 percent in January 2026 following regulated price increases."
    },
    {
      "heading": "External and reserve positions",
      "content": "- Current account: surplus narrowed to 5.4 percent of GDP by 2025 Q3, from 6.3 percent in 2024.\n- Imports growth: moderated to 2.7 percent yoy in the first three quarters of 2025.\n- Combined CBA and SOFAZ reserves: rose to $85 billion by end-2025.\n  - Liquid portion estimated to cover over 38 months of imports.\n  - Liquid portion exceeds 970 percent of the IMF’s reserve adequacy metric.\n- IMF assessment: external position is substantially weaker than the level consistent with medium-term fundamentals and desirable policies, considering intergenerational equity."
    },
    {
      "heading": "Outlook and projections",
      "content": "- Growth:\n  - Staff projection: GDP to pick up to 2.1 percent in 2026 amid continued weakness in oil and gas production.\n  - Nonoil GDP: projected to accelerate to 3.7 percent in 2026, then stabilize at 3½ percent in the medium term.\n  - Oil GDP: projected to decline by 2.0 percent in 2026, then slow decline to 0.5 percent, with overall medium-term GDP around 2½ percent.\n- Inflation:\n  - Projected to pick up to 6.0 percent by end-2026, assuming higher imported food inflation due to the war in the Middle East.\n  - Projected to decline to 4.2 percent by end-2027 (Executive Board assessment).\n- Current account and reserves:\n  - Current account surplus expected to improve significantly in 2026 owing to higher hydrocarbon prices, then weaken gradually over the medium term.\n  - SOFAZ reserves expected to continue growing if hydrocarbon prices remain elevated."
    },
    {
      "heading": "Risks and scenarios",
      "content": "- Upside risk:\n  - Intensification of the war in the Middle East could push hydrocarbon prices up, boosting external and fiscal positions.\n  - Progress in peace agreement with Armenia could foster stronger economic growth.\n- Downside risks:\n  - Higher hydrocarbon prices could also trigger substantial inflationary pressures via global food prices, affect food security, create migration pressures, and increase spending needs.\n  - Heightened geopolitical and policy uncertainty could reduce global growth, weakening Azerbaijan’s growth, external position, and fiscal revenues.\n  - Deepening geoeconomic fragmentation and adverse trade shocks could impede diversification.\n  - Domestic risks: insufficient fiscal consolidation and limited SOE reform/private sector development could raise inflation, weaken fiscal position, and lower growth potential."
    },
    {
      "heading": "Executive Board assessment and policy recommendations",
      "content": "- Strategic priorities:\n  - Sustained fiscal consolidation and private sector–led diversification away from hydrocarbon production remain key priorities given declining hydrocarbon reserves.\n- Fiscal policy:\n  - Medium-term fiscal consolidation is appropriate to ensure intergenerational equity and support external sustainability.\n  - Authorities’ fiscal rule target: reach 13 percent of nonoil GDP in 2029 to achieve constant real annuity across generations over the next decade.\n  - Requirement: save any windfall from elevated hydrocarbon prices.\n  - Need for a clear and comprehensive strategy identifying concrete revenue and expenditure measures to enhance credibility.\n  - Specify more limited escape clauses and an automatic correction mechanism to enhance fiscal rule credibility.\n  - Continue efforts to reduce SOE subsidies, rationalize tax incentives, and strengthen tax administration and compliance (including TADAT self-assessment and external evaluation).\n- Monetary policy:\n  - The CBA should raise policy rates if inflationary pressures persist.\n  - Close monitoring of inflation risks and responding to inflation surprises is important given elevated external uncertainty and limited passthrough.\n  - Need for clear, forward-looking communication as the CBA relies more on inflation forecasts.\n  - Improve passthrough through development of a risk-free yield curve and address structural issues: dollarization, high operating costs, low banking competition.\n- Financial stability and macroprudential policy:\n  - Active macroprudential policy and gradual Basel III implementation have strengthened the financial sector and minimized disruption.\n  - Adopted risk-based supervision to optimize resource use; CBA should ensure adequacy of supervisory resources as individual bank risks become better understood through the Basel III pillar II process.\n  - Continue strengthening financial safety nets, consolidated supervision, and emergency liquidity assistance, including necessary legal changes.\n- Structural reforms and diversification:\n  - Focus on private-sector-led diversification, including attracting foreign direct investment and deepening capital markets to increase private sector access to finance.\n  - Increase labor productivity via human capital investment and reforms to tackle labor market informality.\n  - Reduce the role of regulated prices and lower state subsidies to SOEs to stimulate competition and improve SOE performance.\n  - Improve SOE disclosure, governance, appoint independent supervisory board members, professionalize management, and steadily divest SOEs to the private sector.\n  - Continue efforts to improve governance, transparency, and integrity.\n  - Further work needed to close remaining data gaps despite broadly adequate data provision for surveillance.\n- Consultation cadence:\n  - Recommended that the next Article IV consultation take place on the standard 12-month cycle."
    },
    {
      "heading": "Selected key indicators (as reported)",
      "content": "- Real GDP growth: 2024 = 4.2; 2025 = 1.4.\n- Hydrocarbon GDP: contracted by 1.6 percent in 2025.\n- Nonoil GDP growth: 2024 = 6.5; 2025 = 2.7.\n- Current account surplus: 2024 = 6.3 percent of GDP; 2025 Q3 = 5.4 percent of GDP.\n- Combined CBA and SOFAZ reserves: $85 billion by end-2025.\n- Liquid reserves coverage: over 38 months of imports; exceed 970 percent of IMF reserve adequacy metric.\n- Staff projections: GDP = 2.1 percent in 2026; nonoil GDP = 3.7 percent in 2026; oil GDP = -2.0 percent in 2026.\n- Inflation projections: 6.0 percent by end-2026; 4.2 percent by end-2027 (Executive Board assessment).\n- Food price inflation: 8.2 percent yoy in October 2025.\n- Headline inflation: 5.7 percent in January 2026.\n\nSource: IMF Executive Board conclusion of the 2026 Article IV consultation with the Republic of Azerbaijan (Press Release No. 26/131, April 30, 2026).\n\n---\n\n\n References\n\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2026/04/29/pr-26131-azerbaijian-imf-executive-board-concludes-2026-article-iv-consult"
    }
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    "Published: April 30, 2026",
    "Real GDP: slowed to 1.4 percent in 2025, down from 4.2 percent in 2024.",
    "Hydrocarbon sector: hydrocarbon GDP contracted by 1.6 percent in 2025 due to technical issues.",
    "Nonhydrocarbon sector: growth moderated from 6.5 percent in 2024 to 2.7 percent in 2025.",
    "Headline inflation:",
    "Current account: surplus narrowed to 5.4 percent of GDP by 2025 Q3, from 6.3 percent in 2024.",
    "Imports growth: moderated to 2.7 percent yoy in the first three quarters of 2025.",
    "Combined CBA and SOFAZ reserves: rose to $85 billion by end-2025.",
    "IMF assessment: external position is substantially weaker than the level consistent with medium-term fundamentals and desirable policies, considering intergenerational equity.",
    "Growth:",
    "Inflation:",
    "Current account and reserves:",
    "Upside risk:",
    "Downside risks:",
    "Strategic priorities:",
    "Fiscal policy:",
    "Monetary policy:",
    "Financial stability and macroprudential policy:",
    "Structural reforms and diversification:",
    "Consultation cadence:",
    "Real GDP growth: 2024 = 4.2; 2025 = 1.4.",
    "Hydrocarbon GDP: contracted by 1.6 percent in 2025.",
    "Nonoil GDP growth: 2024 = 6.5; 2025 = 2.7.",
    "Current account surplus: 2024 = 6.3 percent of GDP; 2025 Q3 = 5.4 percent of GDP.",
    "Combined CBA and SOFAZ reserves: $85 billion by end-2025.",
    "Liquid reserves coverage: over 38 months of imports; exceed 970 percent of IMF reserve adequacy metric.",
    "Staff projections: GDP = 2.1 percent in 2026; nonoil GDP = 3.7 percent in 2026; oil GDP = -2.0 percent in 2026.",
    "Inflation projections: 6.0 percent by end-2026; 4.2 percent by end-2027 (Executive Board assessment).",
    "Food price inflation: 8.2 percent yoy in October 2025.",
    "Headline inflation: 5.7 percent in January 2026.",
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