Fitch: Azerbaijan in favorable position to maintain low debt-to-GDP ratio

Fitch Ratings, the international rating agency, believes that Azerbaijan, as a country related to the producers and exporters of energy resources, benefits from the surge in oil prices. This favorably affects the debt-to-GDP ratio, keeping it at a low level, Report informs referring to Fitch Ratings.

Report informs with a link to Fitch Ratings.

The debt-to-GDP ratio in Eastern Europe, which includes Azerbaijan, will be 9.1% this year.

Overall, according to the rating agency, few countries have managed to reverse the damage that the Covid-19 pandemic did to public finances yet.

“As global growth slows in 2022-2023, higher levels of government debt/GDP could leave many sovereigns with less fiscal flexibility to support economic growth and vulnerable sections of the population than during other recent external shocks,” reads the report.

In Eastern Europe, this partly reflects fiscal slippage in 2022 linked to the fallout from the Russia-Ukraine war.

The recent acceleration of inflation in many countries may initially lower debt/GDP by boosting nominal GDP levels and lifting fiscal revenues more quickly than spending, especially for commodity exporters.

“However, structural fiscal-consolidation efforts that require increasing taxes or reducing public spending will likely generate social and political frictions where households and businesses face inflation-related income pressures. In fact, most sovereigns have already eased fiscal policy to offset some of the impact of price rises on households and businesses.”