BAKU, Azerbaijan, May 1. The International Monetary Fund projects that overall fiscal deficits in the Caucasus and Central Asia (CCA) region will widen to 3.3 percent of GDP in 2025 before narrowing slightly to 3.1 percent in 2026, according to its April 2025 outlook, Trend reports.
The IMF notes that fiscal trends in the region continue to diverge between oil importers and exporters.
Oil-importing countries have pursued fiscal consolidation since the pandemic, bringing their primary deficits down to 1.5 percent of GDP in 2024. This adjustment was mainly driven by reduced public spending, despite ongoing inefficiencies and underperformance in tax revenue collection.
For oil exporters, fiscal balances weakened in 2024 due to increased spending, particularly in Kazakhstan. However, public debt levels for oil-exporting economies remain low, averaging around 20 percent of GDP.
The Fund expects sustained spending on defense, infrastructure, and social programs to weigh on fiscal positions in 2025. A gradual return to consolidation is projected for 2026, supported by efforts to broaden tax bases and improve revenue collection. Public debt levels are expected to remain stable over the medium term, staying below 27 percent of GDP for oil exporters and around 35 percent for oil importers.
