Floating-rate obligations account for 48.8% of Azerbaijan’s external public debt, leaving the state budget exposed to higher-than-expected global interest rates.
Azerbaijan’s Chamber of Accounts identified the risk in its opinion on the draft 2027 state budget, published by Report, according to Vesti Baku.
The assessment is based on debt data as of Oct. 1, 2026. If benchmark rates remain elevated, payments on external debt with variable borrowing costs could exceed the amounts included in the budget.
Refinancing Risk
A second risk involves the maturity profile of domestic obligations. At the start of October, 56% of domestic government securities had maturities of up to five years. That means a substantial share of the debt will need to be repaid or refinanced over the medium term, potentially through more expensive new borrowing.
The Chamber of Accounts also noted an increase in tax overpayments recorded by the State Tax Service. Over the first nine months of the year, the total rose by 339.9 million manats to 2.7406 billion manats.
The findings describe risks in the draft budget rather than an increase in debt-servicing costs that has already occurred. The actual burden will depend on interest-rate movements and refinancing conditions.