The state budget recorded a surplus of Manat681m (US$850m) in the first quarter of 2011, a modest increase on the Manat467m surplus recorded in the year-earlier period. State revenue rose to around Manat2.8bn (US$3.5bn) in the first three months, an increase of about 13.2% year on year. As in previous quarters, transfers from the State Oil Fund of the Republic of Azerbaijan (SOFAZ, the overseas windfall fund) were the largest source of revenue in the first quarter, totalling Manat1.3bn. Tax revenue was the second-largest source of government income in January-March, totalling almost Manat1.2bn, a year-on-year increase of 15%. Expenditure rose to almost Manat2.1bn in the first quarter, a year-on-year increase of around 5.5%. At almost Manat1bn, social spending was the government's largest expenditure in the first quarter, up by around 15% year on year.

On April 12th government officials indicated that their state budget forecast for 2011 could be adjusted in May owing to higher than expected global oil prices in the first quarter of 2011. The authorities currently target budget revenue of Manat12.06bn, with over one-half of total to be transferred from SOFAZ. The government currently forecasts expenditure of Manat12.75bn, resulting in a deficit of Manat687m. These targets are based on an official conservative oil price forecast of US$60/barrel, but the government has indicated that it may increase its oil price forecast to US$80/b.

In February 2011 the IMF urged the government to show restraint in fiscal spending to prevent the emergence of stronger inflationary pressures. However, there is a possibility that the government will be tempted to increase spending on social payments and public-sector wages in the revised budget. The authorities may believe that if they increase expenditure in these areas, this will prevent larger protests against the government (see The political scene).