Moody’s reviews Azerbaijan’s credit ratings

Moody’s international rating agency has reviewed Azerbaijan’s long-term issuer and senior unsecured debt ratings affirmed in April 2021 at Ba2, Report informs referring to the rating agency.

The outlook on the ratings was raised from Stable to Positive during the April update. The positive outlook reflects Moody’s assessment that governance and in particular policy effectiveness is improving, albeit from a low base, which may raise the resilience of the government's credit profile

According to the agency’s analysts, the affirmation of the rating shows Azerbaijan’s creditworthiness.

Enhancements to exchange rate management and the communication of monetary policy by the Central Bank of Azerbaijan (CBAR) are likely to foster stability in Azerbaijan’s external and foreign exchange market dynamics.

Overall, the enhancements to Azerbaijan's policy framework, if sustained, would lower government liquidity risk, contain external vulnerability, and provide policy flexibility, especially aided by Azerbaijan's large net creditor status and sizeable sovereign wealth assets.

“Over time, marked progress in economic diversification that reduces the economy's high dependence on hydrocarbons would additionally put upward pressure on the rating,” Moody’s noted.

The gradual lifting of pandemic restrictions and the high level of global oil prices will contribute to the growth of Azerbaijan’s GDP. Moody’s expects real GDP growth of 3.5 percent in 2021, supported by the easing of coronavirus-related restrictions, as well as the growth of oil and gas production.

According to Moody’s estimates, in the next 2-3 years, Azerbaijan’s economic growth will average about 3 percent per year.