BAKU, Azerbaijan, October 17.
Azerbaijan holds a leading position in the South Caucasus in terms
of the volume of its strategic foreign exchange reserves, which are
six times greater than the total reserves of Armenia and Georgia.
According to data from the State Statistical Committee of
Azerbaijan, the country's strategic foreign exchange stood at
$89.38 billion as of September 30, 2026. This amount is about 19.8
times greater than the country's external public debt of $4.51
billion. In a regional comparison, Azerbaijan's strategic reserves
are about 10.9 times larger than Georgia's international reserves,
reported at $8.17 billion in September, and 13.4 times larger than
Armenia's foreign exchange of $6.66 billion.
This disparity highlights the scale of Azerbaijan's financial
buffer. Its strategic reserves encompass both the foreign exchange
of the Central Bank of Azerbaijan (CBA) and the assets of the State
Oil Fund (SOFAZ). This extensive asset base strengthens the
country's capacity to meet external payment obligations and
maintain financial resilience amid global economic shifts.
Azerbaijan’s strategic reserves stand out in
region
The volume of Azerbaijan’s strategic foreign exchange is
significantly higher than the official reserve figures for Armenia
and Georgia. According to data from the National Bank of Georgia,
the country’s international reserves stood at $8.17 billion in
September 2026, while the Central Bank of Armenia reported its
country’s foreign exchange at $6.66 billion. In comparison,
Azerbaijan’s strategic reserves of $89.38 billion are nearly 10.9
times greater than Georgia’s figure and 13.4 times greater than
Armenia’s.
One significant reason for this difference lies in the
composition of Azerbaijan's strategic reserves. The country's
figure encompasses not only the official foreign exchange of CBA
but also the assets of SOFAZ. Therefore, when making comparisons,
it should be noted that Azerbaijan's strategic reserves reflect a
broader base of sovereign financial assets.
According to figures disclosed by the CBA Chairman, Taleh
Kazimov, Azerbaijan's strategic reserves exceed its GDP and are
sufficient to cover approximately 41 months of imports of goods and
services. Furthermore, the fact that these reserves are 3.5 times
larger than the M2 money supply serves as an indicator of the scale
of the foreign currency buffer within the country's financial
system.
The capacity to finance imports over an extended period enhances
the country's room for maneuver in the face of shifts in foreign
trade and international financial markets. This scale of strategic
reserves demonstrates that Azerbaijan possesses substantial
financial resources to meet external payment obligations and
maintain economic stability.
Central Bank reserves and State Oil Fund assets
complement financial buffer
Two key components, the CBA’s foreign exchange reserves and the
assets of SOFAZ, play a significant role in the formation of
Azerbaijan’s strategic reserves.
According to the CBA, its foreign exchange reserves stood at
$15.36 billion as of October 1, 2026. This represents an increase
of $62.1 million (0.41%) compared to September 1, and an increase
of $4.05 billion (35.8%) compared to October 1, 2025. Thus, a
growth of over $4 billion has been recorded in the CBA’s foreign
exchange reserves over the course of one year.
Meanwhile, the assets of SOFAZ amounted to $72.6 billion at the
end of the first half of 2026. The fund’s assets are significant in
terms of accumulating and managing energy revenues, safeguarding
the state’s long-term financial capabilities, and building an asset
base for future generations.
Although these two components perform distinct functions,
together they form the foundation of Azerbaijan’s extensive
financial resources. The CBA’s reserves are significant in terms of
external payments and currency liquidity, while the assets of SOFAZ
facilitate the long-term management of energy revenues.
Current account surplus strengthens the external
financial position
In addition to the scale of strategic reserves, the volume of
foreign currency entering the country is a key indicator of
financial stability. Data on Azerbaijan’s balance of payments for
the first half of 2026 indicate a positive balance in the country’s
external financial position.
According to CBA, the current account surplus reached $4.7
billion, or 12.4% of GDP. This is more than double the $2.3 billion
surplus recorded during the same period in 2025. While the oil and
gas sector posted a current account surplus of approximately $9
billion, the non-oil and gas sector recorded a deficit of $4.3
billion. In the first half of the year, the average realized price
of Azerbaijani oil, at $94.5 per barrel, representing a 33% growth
compared to the same period of the previous year, bolstered export
revenues. During this period, commodity exports amounted to $14.3
billion, while imports totaled $8.1 billion, resulting in a $6.2
billion surplus in commodity trade.
These figures clearly demonstrate the role of the energy sector
in shaping the country’s external financial capacity. Revenues
generated from energy exports enable the accumulation of strategic
reserves, support public finances, and provide resources for
economic development.
At the same time, the expansion of the non-oil and gas sector
creates further opportunities to strengthen the existing financial
base. In the first half of 2026, non-oil and gas exports reached $2
billion, while the surplus in transport services amounted to $941
million. These indicators highlight the potential to further
increase the contribution of non-oil sectors to foreign currency
inflows.
Expansion of budget revenues enhances economic
opportunities
Another factor strengthening Azerbaijan's financial position is
its budget indicators. According to data released by the Ministry
of Finance, revenues for the consolidated budget in the first 6
months of 2026 amounted to 24.4 billion manat ($14.3 billion),
while expenditures totaled 19.8 billion manat ($11.6 billion). This
resulted in a surplus of 4.58 billion manat ($2.69 billion),
equivalent to approximately 7% of GDP.
The non-oil and gas sector also plays a significant role in the
structure of state budget revenues. During the first 6 months,
receipts from this sector reached 10.98 billion manat ($6.4
billion), accounting for 57.3% of total state budget revenues, an
increase of 6.8% compared to the same period of the previous
year.
The expansion of non-oil and gas revenues contributes to the
strengthening of the state's financial base and increases the
contribution of various economic sectors to budget revenue.
Sustaining these results is important for directing the
opportunities created by Azerbaijan's strategic reserves toward
broader economic development goals. According to the Ministry of
Finance’s medium-term forecasts, the share of the non-oil and gas
sector in GDP is expected to reach 82% by 2030. For that period,
nominal GDP is projected to be 169.1 billion manat ($99.47
billion), while non-oil and gas GDP is forecast at 138.6 billion
manat ($81.5 billion). The average annual real growth rate for
non-oil and gas GDP is projected to be 4.4%.
The ratio of public debt to GDP is forecast to reach 19.5% by
the end of 2026 and 20.4% by the end of 2030.
These figures highlight the importance of aligning debt policy
with strategic reserves and budgetary capacity. Furthermore,
directing borrowed funds toward productive projects can contribute
to supporting economic growth and future budget revenues.
Assets of SOFAZ create long-term financial
opportunities
The assets of SOFAZ constitute one of the core components of
Azerbaijan’s strategic reserves. The fact that the fund held assets
worth $72.6 billion by the end of the first half of 2026
demonstrates that energy revenues have been transformed into a
significant financial resource.
Managing the fund’s assets is crucial not only for preserving
existing reserves but also for safeguarding financial capacity for
future periods. To this end, the long-term management of energy
revenues, the generation of investment returns, and the planning of
transfers to the state budget play a vital role.
In the Ministry of Finance’s baseline scenario for 2027-2030,
the average annual price of oil is assumed to be $65 per barrel.
Based on this scenario, the assets of SOFAZ are projected to reach
$73.9 billion by 2030.
This approach highlights the importance of employing prudent
assumptions when planning for energy revenues over the long term.
Azerbaijan’s extensive strategic reserves and the assets held by
the fund enable the state to strike a balance between addressing
current financial needs and preserving resources for future
generations.
Azerbaijan's financial superiority creates basis
for future development
Azerbaijan's strategic foreign exchange of $89.38 billion, the
low level of foreign public debt compared to this amount, the
possibility of financing imports for about 41 months and the
current account surplus are the main advantages of the country's
financial position. These indicators show that Azerbaijan has large
financial resources in the South Caucasus and significant
maneuvering opportunities against foreign economic changes.
A comparison with the reserves of Armenia and Georgia clearly
reveals the scale of Azerbaijan's financial buffer. Azerbaijan's
advantage is related to the wider sovereign financial base, which
is formed due to both the CBA's foreign exchange reserves and the
assets of SOFAZ.
At the next stage, it is of particular importance to turn this
advantage into wider opportunities for economic development.
Increasing non-oil and gas exports, promoting productive
investments, diversifying budget revenues and effectively managing
the assets of the State Oil Fund can further strengthen the
financial position of Azerbaijan.
Thus, Azerbaijan's strategic reserves are not only an indicator
of current financial stability, but also an important resource for
future economic development. Targeted management of these resources
and expansion of the non-oil economy can strengthen the long-term
foundations of the country's financial dominance in the South
Caucasus.
