The International Monetary Fund (IMF) regularly conducts “Article IV Consultations” missions with the objective of assessing the member countries’ macroeconomic conditions, financial stability, fiscal and monetary policies, as well as identifying potential risks. In this context, during the mission to Azerbaijan held in January–February 2025, the IMF delegation was provided with comprehensive information regarding the country’s macroeconomic situation, economic development priorities, reform agenda, and fiscal and monetary policies. Following the conclusion of the mission, the IMF published its concluding statement on Azerbaijan for 2025 in April.
The statement underscores a number of positive outcomes achieved by Azerbaijan in recent years, including the balancing of economic risks, improved performance of state-owned enterprises (SOEs), stabilization of inflation within the target range, restoration of fiscal discipline, increased transparency, and progress in fighting corruption.
Although the statement incorporates much of the information provided by Azerbaijani state institutions, several substantive aspects have not been adequately adressed. Given the influence of assessments by international organizations on shaping global perceptions about countries and on investor decisions, the following issues are of particular importance.
The IMF statement projects Azerbaijan’s average annual economic growth rate for 2025–2030 to be 2,6%. However, according to the most recent macroeconomic forecasts by the Ministry of Economy of the Republic of Azerbaijan, the average annual growth rate for 2025–2029 is projected at 3.8%.
Since 2022, the legal framework for the public-private partnership (PPP) has been established in Azerbaijan. Significant steps have been taken to implement projects under PPPs, which serves as a critical instrument for the private sector development. In 2024, implementation commenced on a seawater desalination project in cooperation with a foreign investor. Nevertheless, reforms carried out in this area as part of broader structural reforms were not reflected in the statement.
The improvement of the tax legislation, expansion of digitalization and administrative capacity in the tax field, implementation of wide-ranging incentives for business promotion, and labor market reforms have led to notable positive outcomes. The labor market reforms were highly praised by experts from Harvard University last year, with Azerbaijan’s model being recognized as an efficient approach worth studying for other economies. However, the IMF’s concluding statement does not fully reflect the scope of the tax policy reforms undertaken in Azerbaijan.
Azerbaijan cooperates with the IMF to align its tax administration with the international value chain. In this regard, the IMF’s Tax Administration Diagnostic Assessment Tool (TADAT) holds particular importance. In 2024, discussions were held between the IMF and the State Tax Service under the Ministry of Economy on conducting an internal assessment using this tool, and the IMF delivered training to the Service’s staff based on the TADAT. Despite this cooperation, the IMF’s statement includes a recommendation for Azerbaijan to utilize this tool.
The statement notes that the share of the industry and manufacturing sector in the credit portfolio increased from 5% to 8% in 2024. However, according to the Central Bank of Azerbaijan (CBA), this figure is 5.5%.
Azerbaijan places great importance on long-term and mutually beneficial partnerships with international organizations and continues to work toward further strengthening these collaborations.
