Among such reforms, the agency noted a new fiscal rule and the government's debt strategy. In particular, Moody's noted that the new fiscal rule will also lend support to economic stability, if the authorities apply its discretionary, countercyclical provisions effectively.
“However, the economic benefits will only materialize over time, as business and consumer confidence over the effectiveness of fiscal policy builds,” the report reads.
As noted, the sovereign credit profile of Azerbaijan is supported by significant and growing position of net assets. As such, the sovereign wealth assets of the State Oil Fund of Azerbaijan (SOFAZ) amounted to $40.3 billion as of the end of March 2019, which is 12.5 percent higher than in late December 2017, and approximately 1.7 times higher than the the sum of the government's direct debt and its explicit guarantees as of the end of 2018.
According to the report, Azerbaijan's net sovereign wealth assets (the asset value after subtracting government debt) are “substantial”, when compared to similarly rated hydrocarbon producers, at around 53 percent of 2018 GDP.
The agency expects this net asset position "to increase further, fostered by the government's fiscal reforms”.
Touching on reforms, Moody's also mentioned strategic roadmaps adopted in December 2016, covering various sectors.
“Among these focuses, we assess tourism and transport and logistics as having the greatest diversification potential,” as stated in the report.