Republic of Azerbaijan

Azerbaijan is recovering from a banking crisis and recession caused by a prolonged decline in oil prices since mid-2014. Monetary conditions remain tight under a de facto peg. Despite rising government spending, the fiscal position is projected to strengthen in 2019 mainly due to firmer oil prices and improvements in revenue administration. Weaknesses in bank balance sheets, structural and policy rigidities, and institutional and governance deficiencies hinder medium-term growth prospects and weaken resilience to shocks.