BAKU, Azerbaijan, November 20. The Azerbaijani Parliament has approved the draft law “On the 2026 Budget of the State Social Protection Fund” in its first reading, Trend reports.
The draft law was presented for discussion during today’s parliamentary plenary session.
For reference, any remaining funds in the accounts of the fund, including those of its apparatus and other structural units defined by the relevant executive body, will be allocated to cover next year’s expenses or invested by the designated institution in accordance with the Law “On Social Insurance.”
If the funds for mandatory state social insurance contributions provided to organizations financed from the state budget are not fully transferred to the State Social Protection Fund during the budget year, the state budget allocation for financing the fund’s obligations will be increased by the difference between the planned and actual contributions to balance the fund’s budget. Conversely, if contributions go over the planned amount, the allocation will be cut back by the difference.
Funding Sources for the Fund’s Expenses
The total revenues of the fund’s 2026 budget are projected at approximately 8.2 billion manat ($4.82 billion), reflecting an increase of 705.7 million manat ($415.1 million), or 9.26 percent, compared with the approved forecast for 2025.
Revenues from mandatory state social insurance contributions are set to come in at 6.5 billion manat ($3.82 billion), accounting for 79.1 percent of the Fund’s total revenues, representing an increase of around 593.7 million manat ($349.2 million), or 9.9 percent, over the 2025 forecast.
Of the projected revenues from compulsory state social insurance contributions in 2026, approximately 2.1 billion manat ($1.24 billion), or 32 percent, will come from organizations financed by the state budget, while around 4.5 billion manat ($2.65 billion), or 68 percent, will be contributed by the non-budgetary sector. These figures represent increases of 73.3 million manat ($43.1 million) (3.6 percent) and 520.3 million manat ($306 million) (13.1 percent), respectively, compared with the approved forecasts for 2025.
Revenues from compulsory contributions that individual entrepreneurs pay for themselves (excluding payments tied to employees) are expected to come in at 103.5 million manat ($60.8 million) in 2026, based on a minimum wage of 400 manat ($235.2). The average monthly wage, a key macroeconomic indicator for estimating these contributions, is expected to rise from 1,102 manat ($648.2) in 2025 to 1,171 manat ($688.8) in 2026, according to data from the Ministry of Economy.
Although the total state obligations for 2026 are estimated at 3.6 billion manat ($2.12 billion), funds allocated from the state budget to balance the State Social Protection Fund are expected to total 1.7 billion manat ($1 billion), covering 47 percent of the total obligations. This allocation is only 100 million manat ($58.8 million), or 6.25 percent, higher than the approved forecast for 2025.
In 2026, revenues from accrued interest, financial sanctions, and other sources are expected to reach approximately 32 million manat ($18.8 million), representing an increase of 2 million manat ($1.18 million), or 6.67 percent, compared with the previous year’s estimate.
Fund Expenses
The Fund’s total expenses for 2026 are projected at about 8.48 billion manat ($4.99 billion), which is 806.6 million manat ($474.4 million), or 10.5 percent, higher than the approved forecast for 2025.
Payments to the population are expected to account for 8.19 billion manat ($4.82 billion), or 96.6 percent of the Fund’s total expenses. Of this amount, around 7.9 billion manat ($4.65 billion) will be allocated for labor pensions, while 203.5 million manat ($119.7 million) will cover benefits financed through mandatory state social insurance contributions. Overall, payments to the population are projected to increase by 787.5 million manat ($463.2 million), or 10.6 percent, compared with the 2025 forecast, with labor pensions comprising 97.5 percent of these payments.
The forecast for labor pension expenses in 2026 is projected at a total of 7.8 million manat ($4.59 million), representing an increase of 10.8 percent, or 782.3 million manat ($460.1 million), compared to the approved forecast for 2025. In calculating this forecast, it was assumed that the monthly pension amount by the end of 2025 would reach 602 million manat ($354.1 million). Considering the monthly fluctuations in pension payments, total pension expenditures for 2026 are expected to reach 7.8 million manat ($4.59 million).
The official data from the Ministry of Economy indicates that with a nominal wage growth rate of 9.2 percent in 2025, the annual financial burden associated with the indexation of labor pensions in 2026 is estimated at approximately 635.6 million manat ($373.8 million). Any changes in the nominal wage indicator could throw off the projected expenditures for pensions and certain benefits that are backed up by mandatory state social insurance contributions. For instance, a one percent change in the wage growth rate alone is expected to impact annual pension expenses by around 72 million manat ($42.3 million).
Expenditures for benefits paid from mandatory state social insurance contributions in 2026 are projected at 203.5 million manat ($119.7 million), exceeding the approved forecast for 2025 by 2.60 percent, or 5.16 million manat ($3 million).