S&P Global Ratings revised its outlook on Azerbaijan to stable from negative and affirmed its long- and short-term foreign and local currency sovereign credit ratings at 'BB+/B', APA-Economics reports citing S&P Global Ratings.
The stable outlook reflects the agency’s expectation that the ceasefire agreement between Azerbaijan, Armenia, and Russia will broadly hold, underpinning a reduction in war-related security, financial sector, and balance-of-payments risks.
It also reflects our view that a rebound in economic activity and comparatively higher hydrocarbon prices will, over the next 12 months, prevent Azerbaijan's fiscal and external positions from deteriorating materially from strong levels.
"We consider that Azerbaijan's fiscal and external stock positions remain among the strongest of sovereigns we rate in the 'BB' category, despite lower hydrocarbon prices and the COVID-19-induced economic slowdown. Large liquid government assets, projected at an average of about 74% of GDP in 2021-2024, will continue to provide a buffer against economic and financial shocks. Reflecting our oil price and production assumptions, and considering Azerbaijan's participation in the OPEC+ production cut agreement, we expect external receipts and fiscal revenue will gradually rise over the medium term. We expect that the government's import-driven reconstruction measures in the territories surrounding Nagorno-Karabakh will, for now, have a moderate impact on fiscal and external flows" reads the agency’s report on Azerbaijan.
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