Even though the financial system of Azerbaijan remains weak, we forecast it will gradually strengthen in tandem with improved growth, the international rating agency Standard and Poor's (S&P) noted in the information on Azerbaijan’s sovereign credit rating, APA-Economics reported.
The agency also views positively the recent improvements in supervision.
“A specialized banking regulator FIMSA has now been set up, and has received additional resources to supervise and oversee banking risks. Mirroring the developments on the fiscal side, Azerbaijan's external position remains strong on a stock basis, and we expect the country's liquid external assets to exceed external debt for the foreseeable future. We currently project a gradual improvement in external flows, which should help arrest the decline in accumulated buffers. Nevertheless, Azerbaijan will remain vulnerable to potential terms-of-trade volatility. We also note the only limited available data for Azerbaijan's balance of payments and international investment position, which possibly leads to an underestimation of external risks,” stated the information.