On November 4, members of Azerbaijan’s Parliamentary Committee on Economic Policy, Industry, and Entrepreneurship held discussions on the draft law on the 2026 state budget, during which key ministers presented forecasts and structural changes in the country’s economy. Azer Amiraslanov, the Chairman of the Parliamentary Committee on Economic Policy, Industry and Entrepreneurship, stated that Azerbaijan’s economy is entering a phase of deep structural transformation, with a projected 2.4% real decline in the oil and gas sector GDP and a 5% growth in the non-oil sector in 2026. He noted that the share of the non-oil and gas sector in GDP is expected to rise from 72% in 2025 to 75.8% in 2026, reaching 80% by 2029. According to Amiraslanov, these projections reflected the government’s sustained efforts to diversify the national economy and reduce dependency on hydrocarbons.

Sahil Babayev, the Finance Minister of Azerbaijan, emphasized that the 2026 budget aimed to maintain macroeconomic, fiscal, and social stability. Speaking before the committee, he stated that the draft fully incorporated measures to strengthen national defense, restore liberated territories, and support social welfare. "The draft budget provides for the full funding of all social programs," Babayev emphasized. He added that the country’s GDP was expected to reach 134.1 billion manats in 2026, reflecting 2.9% real growth compared to 2025. Over the past five years, Azerbaijan’s GDP had grown by 39.3% in nominal terms and 19% in real terms, demonstrating steady progress. Babayev also noted that the non-oil sector GDP was projected to reach 101.7 billion manats ($59.8 billion) in 2026, representing a 5% real increase compared to the current year. Over the past five years, the non-oil sector had expanded by 63% in nominal and 34% in real terms. The minister highlighted that Karabakh and Eastern Zangezur remained priorities in the budget, which included funds for the "Great Return" program, reconstruction, and social reintegration in the liberated regions.

Babayev further reported that Azerbaijan’s public debt stood at 25.4 billion manats (around $14.94 billion), equal to 19.5% of GDP—one of the lowest ratios globally. "We do not anticipate a sharp rise in public debt in the medium term," he said. The debt portfolio included 67.2% in domestic debt and 32.8% in external debt, with minimal exposure to exchange rate risks. He also highlighted that recent reforms had extended the average maturity of government bonds by 2.4 times to 3.5 years and raised the share of long-term bonds from 0.6% to 30%. During the meeting, Babayev outlined the government’s plans to reduce reliance on oil and gas revenues and safeguard foreign currency reserves. He explained that the 2026 budget was structured to ensure that non-oil and gas revenues covered 88.1% of current expenditures, with the goal of reaching 100% coverage by 2029. "Next year, current expenditures will amount to 25.2 billion manats, 18% higher than in 2024," the minister noted. Babayev highlighted that for the first time, Azerbaijan would reduce the ratio of the non-oil primary deficit of the consolidated budget to non-oil GDP to 19% in 2026, down from 22.4% in 2025. "This is a very serious and important dynamic," he stated, noting that the target was to reduce it to 13% by 2029. He added that the share of non-oil revenues in the budget would reach 57% in 2026 and 63% in the consolidated budget.

Mikayil Jabbarov, the Minister of Economy, emphasized that Azerbaijan’s average annual GDP growth for 2022–2025 was projected at 3.3%, entirely driven by the non-oil and gas sector. "Despite ongoing global economic uncertainties, Azerbaijan has maintained stable development this year," he stated. The non-oil sector’s average annual GDP growth was projected at 6.1%, surpassing national targets. Jabbarov stated that the private sector’s share in non-oil and gas tax revenues had exceeded 77%. Tax revenues from this segment had grown by over 10% in the first nine months of 2025, reflecting the success of diversification policies. He added that mandatory state social insurance contributions had reached 4.7 billion manats (over $2.76 billion), representing a 12% annual increase. Jabbarov projected that GDP per capita would reach $7,667 in 2026 and $9,140 by 2029. He also announced new tax incentives aimed at boosting non-oil private sector growth and economic transparency. The initiatives included tax breaks for entrepreneurs in Nakhchivan and liberated territories, incentives for transport manufacturing, agricultural tax exemptions for fish farming, reduced VAT rates for the catering sector, and an increased VAT registration threshold from 200,000 to 400,000 manats ($235,200). Jabbarov underlined that these reforms were part of efforts to encourage formal employment and expand fiscal transparency, noting that employment contracts in the non-oil private sector had risen by 471,000 since 2019.

The Economy Minister also reported that oil production in 2026 was projected at 27.6 million tons, while commercial gas output was expected to reach 38 billion cubic meters. He explained that the full-scale development of the Absheron field by 2029 would reverse the temporary decline, with oil and gas sector GDP expected to decrease by 2.4% in 2026 and by 0.6% annually until 2029. Jabbarov noted that Azerbaijan’s GDP was forecast to grow by an average of 3.5% annually from 2026 to 2029. He emphasized that budget forecasts were prepared under various scenarios to account for global uncertainties in energy, food, and financial markets. Jabbarov also confirmed that the extension of tax incentives for the Baku Shipyard had been approved, citing its strategic importance for the Middle Corridor and its recent operational profitability. He stated that the yard was currently building around ten vessels simultaneously, marking a strong revival of production capacity. Responding to MPs’ questions, Jabbarov reported that the State Oil Company of Azerbaijan (SOCAR) had more than doubled its net profitability over the past five years, while EBITDA had tripled. He emphasized that the company paid multiple types of taxes and that the optimization of state-owned enterprises would remain a priority. "I am confident that questions raised by MPs will be answered accordingly," Jabbarov stated.

Taleh Kazimov, the Governor of the Central Bank of Azerbaijan, announced that the country’s strategic currency reserves had increased by 16.2% in the first ten months of 2025, reaching $82.5 billion. He noted that foreign exchange reserves alone stood at $11.4 billion, sufficient to cover 37 months of imports. Kazimov stated that inflation control and exchange rate stability would remain the main priorities in 2026 and emphasized that fiscal policy would continue to support social welfare, economic activity, and the reconstruction of liberated territories. According to data from the draft budget, expenditures for 45 public legal entities in 2026 were projected at 895.2 million manats (about $526.6 million), a decrease of 11.8% compared to the current year. Agricultural spending in 2026 was projected at 1.2 billion manats ($706 million), accounting for 3% of total expenditures—a rise of 11.5% compared to 2024. Babayev stressed that such allocations demonstrated the government’s commitment to supporting food security and rural development.