Azerbaijan is planning to sharply reduce its budget deficit next year by slashing government expenditure and increasing tax revenues, a draft budget document seen by Reuters on Monday showed, as it struggles with weak global oil prices.
Oil and gas account for about 75 percent of Azerbaijan's state revenues and 45 percent of
gross domestic product, so the slump in crude prices since mid-2014 has hit the former Soviet republic particularly hard.
The 2017 budget draft is based on an average oil price of $40 per barrel. Brent oil LCOc1 is currently trading at around $47.6 per barrel.
Azerbaijan's budget deficit is seen falling to 645 million manats ($375 million) next year from 1.7 billion manats expected this year, the draft document showed. That equates to a budget deficit of 1.05 percent of GDP versus 2.9 percent of GDP expected this year.
Revenues are seen at 15.955 billion manats in 2017, down from 16.8 billion projected for this year. Spending is expected at 16.6 billion manats, down from 18.5 billion in 2016.
Tax revenues are projected to rise to 7.2 billion manats in 2017 from 7.0 billion manats expected this year. Tax revenues from the oil sector are expected to reach 1.75 billion manats, up from the 1.61 billion manats expected in 2016.
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