S&P specialists note that the growth of the ratio of Azerbaijan’s external debt to the country’s GDP as a result of restructuring of foreign liabilities of the International Bank of Azerbaijan (IBA) was taken into account in the agency’s January forecast, so now this process will not affect Azerbaijan’s ratings.
S&P estimates that as a result of the restructuring, Azerbaijan’s net general state debt could increase by about 9 percent of GDP due to the direct assumption of IBA’s foreign liabilities and SOFAZ’s deposit in IBA, which the ratings agency excluded from its calculation of state liquid assets.
“We had already incorporated additional fiscal costs stemming from IBA’s weak financial position in our forecast published in January 2017,” the ratings agency said. “As such, we believe the current proposals lead to only a modest increase in net debt compared to what we had previously expected.”
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