The international credit rating agency” Fitch Ratings “(KRA) has increased the long-term issuer default rating (IDR) of Azerbaijan in foreign currency from ”BB+“ to”BBB - " with a stable forecast. Gunay Guliyeva, head of the Economic analysis division of the Center for Analysis of Economic Reforms and Communication, said that this indicator emphasizes Azerbaijan's economic stability and strong foreign economic balance and points to a promising future for investment and economic growth.
According to G.Guliyeva, the rating agency notes that the sovereign foreign currency assets of Azerbaijan in 2024 will reach 74 billion US dollars, which is 98% of the projected GDP. It should be noted that the bulk of these reserves belongs to the Sovereign Fund of Azerbaijan (SOFAZ). The high level of assets ensures that Azerbaijan's net sovereign asset position remains the highest among BBB and A rated sovereigns. The report shows that despite the projected decline in the current account surplus, Azerbaijan will continue to lead the BBB category, supported by high oil and gas revenues. Fitch KRA estimates that Azerbaijan's net foreign creditor position will strengthen in 2024 to 154% of GDP and will be the strongest among “BBB” sovereigns.
The head of the CAERC department also added that the agency expects Azerbaijan to continue its fiscal policy, which maintains a sustainable budget surplus and a commitment to reducing dependence on oil in public finances. According to the analysis of the agency's experts, strengthened sovereign external buffers and prudent fiscal policy increased Azerbaijan's resilience to external shocks and fluctuations in oil prices, and improved the ability of the Central Bank of the Republic of Azerbaijan to control internal liquidity and foreign exchange demand.
The report predicts that government debt will grow to 2026 of GDP, while remaining low by 22.7%. At the same time, it is assumed that inflation will be below the target inflation in 2024-an average of 3.5%, emphasizing the effectiveness of inflation control measures carried out by the government. It is noted that due to the positive effects of the restoration of Karabakh, economic growth is cyclically restored to 3.2%.
G.Guliyeva highlighted that Azerbaijan's Environmental Social Corporate Responsibility (ESG) compliance ratings reflect the significant impact of political stability, the rule of law and corruption control on its credit profile. The report highly appreciates Azerbaijan's commitment to improving governance and diversifying the economy.
It should be noted that this increase in the sovereign credit rating highlights several critical aspects of Azerbaijan's economic strategy. The external balance maintained by Sofaz demonstrates our country's strong financial management and prudent fiscal policy. The projected current operations account surplus points to a sustainable economy that can maintain stability and growth, even with low oil prices.
The continued budget surplus and low public debt demonstrate the government's commitment to maintaining macroeconomic stability and reducing dependence on oil revenues. This strategic approach not only protects the economy from external shocks, but also lays the foundation for sustainable development.
In conclusion, the head of the CAERC Department noted that the improvement of the sovereign credit rating of our country by “Fitch Ratings” emphasizes the stable economic situation and financial health of Azerbaijan and makes it an attractive direction for future investments. Strengthened external balance, sustainable budget surpluses and low public debt encourage investors to explore opportunities in Azerbaijan by creating a positive investment climate.
Azerbaijan's investment rating is the result of successful economic reforms under the leadership of President Ilham Aliyev. It should be noted that the model of managing economic reforms in Azerbaijan was presented as an example by the OECD public sector innovations Observatory.