BAKU, Azerbaijan, Jan.23

By Zeyni Jafarov – Trend:

Standard & Poor's (S&P) Global Ratings upgraded the outlook on Azerbaijan's ratings from ‘negative’ to ‘stable’ with maintaining long- and short-term sovereign credit ratings in foreign and local currencies at ‘BB+/B’, Trend reports referring to the reported data of S&P.

The report noted that the forecasts reflect the fact that in the next 12 months, as a result of the economic recovery and the relative rise in hydrocarbon prices, the financial and international positions of Azerbaijan won’t deteriorate.

According to the report, in order to further upgrade Azerbaijan's rating, it’s necessary either to exceed the surplus of the foreign trade balance over expectations or to carry out a number of structural reforms by the government in order to make the country's monetary policy more effective and strengthen the banking sector.

S&P said that the budgetary and external stock positions of Azerbaijan remain one of the strongest among sovereign states, which are rated in the ‘BB’ category, despite lower hydrocarbon prices and a slowdown in economic growth caused by the COVID-19 pandemic. Large liquid government assets, projected at an average of about 74 percent of GDP in 2021-2024, will continue to provide protection against economic and financial shocks.

"Given our assumptions about the oil price and production volumes, as well as taking into account Azerbaijan's participation in the OPEC + production cut agreement, we expect that external revenues and budget revenues will gradually increase in the medium term and government measures to restore the territories liberated from the Armenian occupation by imports will moderately impact fiscal and external flows at the moment," added the report.

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