(Adds details, background)
By Nailia Bagirova
BAKU, Dec 16 (Reuters) - Azerbaijan's parliament on Friday passed a budget for 2017 based on an oil price of $40 per barrel which foresees 1 percent growth in gross domestic product (GDP) next year.
Oil and gas account for about 75 percent of Azerbaijan's state revenues and 45 percent of the GDP, so the slump in crude prices since mid-2014 has hit the former Soviet republic particularly hard.
The Azeri government cut the base oil price in this year's budget to $25 per barrel and moved the currency to a managed float, easing pressure on foreign exchange reserves.
Economic growth slowed in Azerbaijan, which lies between Russia and Iran, to 1.1 percent last year from 2.8 percent in 2014, well below official forecasts, because of low oil prices and the devaluation of the national manat currency.
The Economy Ministry said in October the economy would contract by 2.8 percent this year, dramatically revising down its previous forecast, which was for GDP to grow 1.8 percent in 2016.
Azerbaijan's budget deficit is expected to fall to 650 million manats ($371 million) next year from 1.673 billion manats expected this year. That equates to a budget deficit of 1.05 percent of GDP versus 2.9 percent of GDP expected this year.
Revenues are seen at 16.25 billion manats in 2017, down from 16.8 billion projected for this year. Spending is expected at 16.9 billion manats, down from 18.5 billion in 2016.
Tax revenues are projected to rise to 7.2 billion manats in 2017 from 7.0 billion manats expected this year. Tax revenues from the oil sector are expected to reach 1.75 billion manats, up from the 1.61 billion manats expected in 2016.
$1=1.75 manats Writing by Maria Kiselyova and Margarita Antidze, Editing by Angus MacSwan