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Moody's upgrades Azerbaijan's financial stability rating

29 July 2020 11:00 (UTC+04:00)
Moody's upgrades Azerbaijan's financial stability rating

By Ayya Lmahamad

Moody's International Rating Agency has raised Azerbaijan’s financial stability rating from "a3" to "a2".

According to the agency’s report, Azerbaijan’s credit profile reflects the country's "ba3" economic strength, which balances moderate wealth levels against the economy's significant exposure to hydrocarbons.

Furthermore, the government's "a2" fiscal strength underpinned by the country's strong net creditor position, as the size of sovereign wealth assets covers all of the government's direct debt and guarantees, notwithstanding the high share of foreign currency debt.

Additionally, "ba" susceptibility to event risks driven by geopolitical risk, which relates to a low probability, high impact scenario involving an escalation in tensions with Armenia over the disputed territory of Nagorno-Karabakh to full scale hostilities.

Earlier it was reported that, Moody’s has evaluated Azerbaijan's economy as stable in its latest report from June 2020. Despite the spread of the coronavirus pandemic and the gradual decline in global oil and gas prices over the past three months, the agency's rating of the current assessment of the country's resilience to external shocks is positive.

Moody's international rating agency calls Azerbaijan's currency reserves the main guarantor of macroeconomic stability in Azerbaijan.

Moreover, the agency stated that current account surpluses are directly linked to oil and gas prices, economic and legal reforms led by President Ilham Aliyev and that will deepen the investment and business environment for further growth of the non-oil industry in the post-pandemic period.

Nevertheless, the agency presented a positive forecast for 2021 among oil producing and exporting countries only in relation to Azerbaijan.

Moody's an international rating agency and is a subsidiary of Moody's Corporation.

It is engaged in assignment of credit ratings, research and risk analysis. Along with Standard & Poor's and Fitch Ratings, Moody's is one of the "big three" international rating agencies.

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