Apr 25, 2024 (MENAFN via COMTEX) --
(MENAFN - AzerNews)
Ulviyya Shahin Read more
Fitch Ratings, the renowned international credit rating agency,has recently highlighted the potential for an increase inAzerbaijan's credit rating. This forecast is based on several keyfactors that reflect the country's economic strengths and itsefforts to address existing vulnerabilities.
One of Azerbaijan's notable strengths is its robust externalbalance sheet, coupled with low debt levels, standing at 21.8% bythe end of 2023. This healthy financial position has been furtherbolstered by the government's commitment to adopt a more prudentfiscal stance, particularly in managing windfall revenues generatedfrom high oil prices. Such proactive measures have garnered aPositive Outlook from Fitch Ratings in 2022.
Despite these positive indicators, Fitch recognizes persistentvulnerabilities within Azerbaijan's economic landscape. Theseinclude weak monetary policy, heavy reliance on hydrocarbons, andlow potential growth. Monetary policy constraints stem from factorssuch as excess liquidity, an underdeveloped local market, and highfinancial dollarization.
However, Fitch acknowledges the progress made in addressingthese vulnerabilities. The introduction of new central bankinstruments aimed at improving policy rate transmission and effortsto reduce financial dollarization are steps in the right direction, Fitch underscores that fiscal policy remains theprimary lever to manage risks associated with oil revenuevolatility.
Fitch emphasizes that greater confidence in preservingAzerbaijan's strong public balance sheet and enhancing theeffectiveness of its policy framework to manage external shockscould prompt a positive rating action. This underscores theimportance of continued efforts towards fiscal prudence andeconomic diversification.
It's important to note that Fitch Ratings recently confirmedAzerbaijan's Long-Term Foreign-Currency Issuer Default Rating (IDR)at 'BB+' with a Positive Outlook on February 17 of the currentyear. This affirmation reflects a stable credit profile with thepotential for further improvement, contingent upon the country'songoing commitment to economic reforms and prudent fiscalmanagement.
In conclusion, Fitch's positive outlook underscores Azerbaijan'sprogress in strengthening its economic fundamentals. However,sustained efforts are needed to address lingering vulnerabilitiesand ensure long-term financial stability and growth.
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COMTEX_451406052/2604/2024-04-25T12:06:51
