Page 32 - Caucasus Outlook 2025

Investment in the sector totalled AZN5.1bn ($3.0bn), a 9% decline compared to 2023, underscoring challenges in capital expenditure amidst fluctuating global energy prices. Despite this, ongoing gas production growth highlights the sector’s long-term potential.
Azeri Light crude oil averaged $76.13 per barrel in November, reflecting a 0.56% decline due to continued volatility in global markets.
The oil and gas sector’s performance remains integral to Azerbaijan’s economic stability, driven by strategic projects like Shah Deniz-2 and critical export infrastructure such as the BTC and South Caucasus pipelines.
6.0 Budget and debt outlook 6.1 Budget and debt – Georgia
The 2025 budget presented by Georgian Finance Minister Lasha Khutsishvili to Parliament in December sets out GEL32.4bn ($11.85bn) in expenditures. The plan is based on a projected 6% economic growth, with inflation expected to stabilise at 1%.
Tbilisi projects the consolidated budget deficit at 2.5% of GDP, and government debt at 35.9%.
Fitch rating agency said in December that government debt levels seem manageable, with gross general government debt recorded at 38.1% of GDP as of May 2024. This is significantly below the 'BB' category median of 55.2%. Fitch anticipates the debt ratio will average 38.7% in 2025-2026, staying comfortably under the 60% debt ceiling. However, vulnerabilities tied to potential currency depreciation persist.
Tax revenues are anticipated to account for 25.5% of GDP, amounting to GEL25.3bn. A privatisation target of GEL500mn has been set, while the budget deficit is projected at 2.5% of GDP. Government debt is expected to remain at 35.9%.
Healthcare and social protection dominate spending, with over GEL8.67bn allocated. This includes pension increases of GEL35 for all groups, enhanced social allowances for people with disabilities, and GEL2bn earmarked for healthcare programmes, such as a 10% salary hike for primary healthcare staff.
Education and science will receive over GEL3.95bn, a 12% share of the total budget. This includes funds for public school salaries, kindergarten staff raises and extensive school and kindergarten infrastructure projects. Additionally, GEL8bn is allocated for infrastructure
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