Page 34 - Caucasus Outlook 2025

priority was given to key infrastructure projects, including transport and renewable energy development. The government also maintained fiscal discipline, adhering to debt stabilisation rules to ensure that public debt remained within sustainable thresholds.
6.3 Budget and debt – Azerbaijan
The 2025 budget presented to Azerbaijan’s Milli Majlis outlines AZN38.4bn ($22.6bn) in revenues and AZN41.4bn in expenditures, making it the largest budget in modern Azerbaijani history. The plan anticipates a 3.5% GDP growth rate, with the non-oil sector expected to expand by 4.9%. The budget deficit is projected at 2.4% of GDP, reflecting a prudent fiscal stance amid continued economic growth and stability.
Defence and national security remain a top priority, with allocations reaching AZN8.6bn, constituting 20.6% of total expenditures. This increase underscores Azerbaijan's commitment to strengthening its military capabilities and ensuring national security amidst regional challenges. Social welfare will also account for over 40% of expenditures, focusing on wage and pension increases. Around 3mn citizens will benefit from higher minimum wages, pensions and social benefits, with the average monthly pension expected to rise to AZN535 and pensions for retirees reaching AZN571.
A significant portion of the budget will be directed towards the reconstruction and development of Karabakh and Eastern Zangezur, with AZN4bn allocated for ongoing infrastructure and resettlement projects. The “Great Return” programme continues to advance, with over 9,300 former IDPs already resettled in liberated territories. Simultaneously, investments of AZN150mn will support Nakhchivan’s development under its dedicated State Programme, alongside targeted reforms to improve the region’s energy and water management.
Infrastructure development remains a key priority, with funds allocated to road construction, education facilities and municipal enhancements. Projects outlined under the 2022–2026 Socio-Economic Development Strategy will receive AZN1.1bn, while an additional AZN540mn will support critical social and infrastructure investment projects. Education and healthcare sectors will see expanded funding to improve access to quality services, including upgrades to schools and hospitals and enhanced healthcare provisions under the Medical Services Package.
The government maintains its focus on fiscal sustainability, optimising spending to redirect resources to priority areas. Measures to increase efficiency in public sector spending will release additional funds, supporting new international initiatives such as Azerbaijan's participation in Expo 2025 and the promotion of export and investment
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