Fitch expects Azerbaijan’s net sovereign creditor asset position to grow to 68.7% of GDP

Fitch projects Azerbaijan’s net sovereign creditor asset position grows 10.9pp in 2023-2024 to 68.7% of GDP, comfortably the highest in the rating peer group, Report informs referring to Fitch Ratings.

“Sovereign foreign-currency assets grew by $5.9 billion in 2022 to $58 billion, 85% of which is held by the sovereign oil fund (SOFAZ) where higher energy revenues more than offset a 5.2% loss on its investment portfolio.

The current account surplus rose an estimated 14.6pp in 2022. Oil and gas now comprise close to 93% of Azerbaijan's total exports,” Fitch noted.

The rating is supported by Azerbaijan’s very strong external balance sheet, the lowest public debt in its peer group, and financing flexibility from large sovereign wealth fund assets.

“Greater confidence that the strong public balance sheet will be preserved, for example, due to continued expenditure restraint in line with the fiscal rule, or prolonged high energy prices, further strengthening of the external balance sheet, for example, due to sustained high energy prices, improvements in the effectiveness and predictability of Azerbaijan’s policy framework are factors that could, individually or collectively, lead to positive rating action/upgrade.”

Fitch Ratings affirmed Azerbaijan's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB+' with a Positive Outlook.