The drop in oil prices threatens to blow a large hole in the budget of energy producer Azerbaijan, but officials say the government can cope by raising taxes elsewhere.


The former Soviet republic may lose almost half of its projected revenues and revise its 4.4 percent growth forecast this year if the oil price averages around $40 per barrel, analysts estimate.


Brent crude oil rose to almost $50 a barrel on Friday, although analysts did not expect a stronger rebound yet.


Azerbaijan's 2015 budget anticipates revenues of 19.4 billion manats ($25 billion) based on an estimated oil price of $90 per barrel, down from $100 last year.


"If we calculate the average price of oil to be $40 (per barrel), this will mean a loss of 9 billion manats per year from oil revenue," Qubad Ibadoglu, an independent analyst, said.


Oil prices have dropped by nearly 60 percent since June as global production outstrips weak economic growth.


The government says the budget "will include extra taxes, which will come through expanding the base for taxes and fees owing to the development of the non-oil sector," Finance Minister Samir Sharifov said on Thursday.


"The state budget will also receive taxes and other proceeds remaining from past years and envisaged for 2015. The treasury will also gain from amendments made to the Tax Code."


Pro-government newspapers have run headlines such as: "Azerbaijan is not afraid of $60 per barrel."


"If we take a look at the past 20 years, we can see that the oil prices have constantly changed," Natiq Aliyev, Azerbaijan's energy minister said.


Officials acknowledge the Azeri state oil company SOCAR will face financial losses, but say these are not alarming.


An average oil price of $60 per barrel would reduce SOCAR's revenues by $510 million, a senior official said.


"It's a big sum for SOCAR, of course, but it can be covered by regulating spending," Suleiman Gasymov, SOCAR vice-president, told Reuters.


He added that SOCAR's annual dividends of $300-$400 million from participation in the Azeri-Chirag-Guneshli project, operated by the British oil major BP, might be reduced by 50 percent this year, if the price remained at the current level.


"We are not afraid of it ... The production cost of oil for SOCAR is $15 per barrel," Gasymov said.