Azernews.Az

Moody`s Investors Service raised Azerbaijan`s foreign sovereign credit rating by one notch to an investment grade Baa3 last week, citing a combination of rapid foreign reserve accumulation and improvement in the non-oil sector of its economy.

High oil prices have helped the government accumulate considerable foreign assets in both SOFAR, the country`s sovereign wealth fund, and the reserves of the CBA [Central Bank of Azerbaijan], which amounted to around USD40 billion at the end of 2011 [75 percent of GDP], Moody`s said in a statement.

Government spending to improve the infrastructure of the former Soviet republic of about 9 million people in the South Caucasus was cited as a secondary reason for the upgrade. Moody`s has a stable outlook on the credit.

This strong performance has helped the economy avoid an outright contraction in output as oil production decreased sharply due to temporary, maintenance-related, disruptions in the country`s main Azeri-Chirag-Gunashli oilfields during 2011, Moody`s said, adding it believed there will continue to be support for developing a diversified economy.

Last year both Standard & Poor`s and Fitch Ratings put Azerbaijan at investment grade with a BBB-minus rating. S&P has a stable outlook while Fitch has a positive outlook for the credit.