The Ba1 rating is supported by a number of credit strengths, including sizeable hydrocarbon reserves, which provide substantial revenue to the government; low (though rising) government debt and low interest payments; and large foreign reserves, held in a sovereign wealth fund, which cushion against internal and external shocks, according to the Moody’s December 2016 report.
“Although Azerbaijan’s public finances are highly sensitive to fluctuations in oil prices, manageable levels of government debt, sizable reserve buffers and high debt affordability provide ample fiscal space,” said the report.
Moody’s forecasts growth of 1.1 percent in 2017 and 1.9 percent in 2018, as hydrocarbon prices increase, credit growth resumes, and increased gas production from the second stage of the Shah Deniz gas field comes on stream, the report said.
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