Fitch expects increase in Azerbaijani central bank’s foreign exchange reserves
Fitch expects official foreign exchange reserves of the
Azerbaijani Central Bank to rise to 4.9 months of import cover.
The Central Bank's official foreign exchange reserves hit $6.1
billion or 3.4 months of import cover at end-2015, the statement
said.
Fitch expects annual average consumer price inflation to reach 14
percent year on year in 2016.
However, the banking sector is small enough for the authorities to
easily provide support if needed, with assets of 50 percent of
GDP.
Fitch expects that import compression will help it maintain current
account surpluses of around five percent of GDP in 2016-2017.
Restoration of price competitiveness following the devaluation
should aid non-oil growth, particularly in tourism and
agriculture.
The main factors that, individually or collectively, could trigger
positive rating action are an improvement in the budgetary
position, improvements in governance and the business
environment.
Fitch assumes that Brent crude will average $35/b in 2016 and $45/b
in 2017 and rise to long-term average of $65/b.
The issue rating on Azerbaijan's senior unsecured foreign currency
bond has also been downgraded to 'BB+' from 'BBB-'.
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