Azerbaijan’s current fiscal stance is quite strong; however, this stability is completely based on oil-related revenues. In the meantime, the situation with alternative sources of fiscal revenues is uncertain. A large part of fiscal management is built on opacity and an assessment of budget spending efficiency has never been done. It is likely that Azerbaijan will only be able to maintain its fiscal stability through the next ten years or so, i.e. until the end of the active oil-extraction period. As the country has more than a decade to go before it runs out of oil, Azerbaijan still has time to revise its approach to fiscal risks and develop an efficient set of tools to deal with the outlined problems. At this stage, the country can still avoid pitfalls and create reliable fundamentals for sustainable long-term non-oil growth.

CASE Network E-briefs, No. 02/2012: Azerbaijan’s Fiscal Policy after the Oil Boom