The International Monetary Fund (IMF) published an end-of-mission statement for its 2026 Article IV consultation with Azerbaijan, setting out preliminary findings on the macroeconomic outlook and policy priorities. Staff highlighted the need to stay on course with fiscal consolidation, further strengthen the monetary policy framework, and complete implementation of Financial Sector Assessment Program (FSAP) recommendations. Growth slowed to 1.4 percent in 2025 from 4.2 percent in 2024 as hydrocarbon output declined and non-hydrocarbon growth moderated. Inflation temporarily rose above the upper bound of the Central Bank of Azerbaijan (CBA) target range before returning within the band in the second half of 2025, while credit growth slowed and banks remained well capitalized and profitable. The combined CBA and State Oil Fund of Azerbaijan (SOFAZ) reserves increased from USD 70 billion at end-2024 to USD 85 billion by end-2025; GDP is projected at 2.1 percent in 2026 and inflation at 5.0 percent by end-2026 and 4.0 percent by end-2027, with a weakening external position but a still-positive current account in 2026–27. On financial sector policies, staff assessed that maintaining the current countercyclical capital buffer calibration is appropriate, supported implementation of the liquidity coverage ratio and the planned introduction of the net stable funding ratio, and pointed to risk-based supervision, gradual Basel III adoption, and enhancements to the financial safety net as key elements for strengthening oversight and resilience. IMF staff will prepare a report for consideration by the IMF Executive Board, subject to management approval.

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