World Courant
ISTANBUL
Fitch Scores mentioned Friday it upgraded Azerbaijan’s long-term international forex issuer default ranking to BBB- from BB+ with a secure outlook.
The ranking company mentioned the improve displays the nation’s strong exterior steadiness sheet, continued present account and financial surpluses, decreased foreign-currency vulnerabilities, low authorities debt and creating financial coverage.
Annual inflation remained under the central financial institution’s goal band of 4% within the first half of 2024 and it’s anticipated to common 3.5% this 12 months, earlier than growing to 4.7% by 2026, it mentioned in a press release.
Whereas Azerbaijan’s central financial institution has paused its financial easing cycle since Might, Fitch doesn’t anticipate extra fee cuts due to “the anticipated pick-up in inflation because of elevated regulated costs and the projected enhance in authorities spending from the 2024 amended finances.”
The nation’s financial system is forecast to get better to three.2% however slowing to 2.7% subsequent 12 months and a pair of.3% in 2026, though it’s anticipated to be nonetheless supported by public funding.
“In the meantime, the drag of the oil sector will ease relative to earlier years, because of new oil manufacturing that would sluggish the tempo of the decline and better pure gasoline manufacturing,” mentioned the assertion.
Fitch warned that Azerbaijan’s ranking might be negatively affected if there’s a deterioration within the financial coverage combine that would lead to macroeconomic and monetary stability dangers, or if there are will increase in Azerbaijan’s vulnerability to exterior shocks together with oil value volatility.
Different detrimental results embody important erosion of its steadiness sheet because of persistently decrease commodity costs, and a extra fast decline in hydrocarbon outputs, or important fiscal loosening.
Azerbaijan’s ranking might be positively affected if it continues to strengthen its financial coverage framework and institutional capability that improve its capability to soak up shocks.
Profitable implementation of structural reforms that help improved governance and better development may additionally result in a optimistic ranking motion, it added.
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