By Nigar Abbasova
Moody’s Investors Service forecasts Azerbaijan’s GDP to grow in the years to come. The international rating agency forecasts growth by 1.1 and 1.9 percent in 2017 and 2018, respectively.
Moody’s forecasts growth as hydrocarbon prices increase, credit growth resumes, and increased gas production from the second stage of the Shah Deniz gas field comes on t.
The Ba1 rating is supported by a number of credit strengths, including sizeable hydrocarbon reserves, which provide substantial revenue to the government; low (though rising) government debt and low interest payments; and large foreign reserves, held in a sovereign wealth fund, which cushion against internal and external shocks, according to the agency’s analysts.
“Although Azerbaijan’s public finances are highly sensitive to fluctuations in oil prices, manageable levels of government debt, sizable reserve buffers and high debt affordability provide ample fiscal space,” reads the report.
The Agency is sure that Azerbaijan’s modified 2016 budget demonstrates the authorities’ strong commitment to fiscal consolidation.
Standard & Poor's credit rating for Azerbaijan currently stands at BB+ with negative outlook, while Fitch's credit rating for Azerbaijan was last reported at BB+ with negative outlook.
Earlier commenting on sovereign rating downgrade by the international rating agencies, Finance Minister of the country Samir Sharifov connected the downgrade with drop in oil prices and its negative side-effects on the economy, mentioning that the country will restore its rating gradually due to the stabilization of the economic situation, increase of the volume of export earnings, as well as positive results of reforms which are implemented in the country.
Under the new Strategic Road Map of Azerbaijan, national rating agencies may appear in Azerbaijan in 2018-2019.
The evaluation of the credit on the basis of individual rating will allow to precisely define capital and reserve requirements, which in turn will lead to the effective use of resources and increase of competitiveness and financial stability of separate financial institutions and the banking sector as a whole.
Nigar Abbasova is AzerNews’ staff journalist, follow her on Twitter: @nigyar_abbasova
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