The country's external balance sheet, which is a key support to the rating, has started to recover, Fitch Ratings reported.
‘Driven by higher oil prices, the current account balance has turned to a surplus since 2Q17, and Fitch estimates the surplus reached 3.1% for the full year. As a result, FX reserves have risen by an estimated 22%; assets in the State Oil Fund of Azerbaijan (Sofaz) have also increased slightly to USD35.8 billion at end-2017 (2016: USD33.1 billion), equivalent to 87.4% of 2017 GDP. Fitch expects Sofaz assets to continue rising thanks to steady oil prices and expected limitations of its transfers to the state under a new fiscal rule in 2019’, the agency said.
Fitch expects the budget balance to return to surplus from 2018 despite rising capital spending, thanks to higher oil revenues.