Azerbaijan Rating Affirmed by Fitch on State Finances, Oil Cash
Baku, April 29 (AZERTAC). Azerbaijan’s credit rating was affirmed by Fitch Ratings, which cited strong state finances, cash from energy sales and low debt.
The long-term foreign and local currency ratings were left at BBB-, the lowest investment grade and on par with Romania, Croatia, Bulgaria and Turkey. Fitch kept the outlook on its assessment at stable.
The rating “weighs a strong government balance sheet, the product of windfall oil revenue and low indebtedness, against high oil dependence and poor governance,” Fitch analyst Charles Seville said today in an e-mailed statement from London. “Azerbaijan’s sovereign balance sheet is one of the strongest among rated sovereigns and mitigates the budget’s high dependence on oil revenues.”
Azerbaijan’s economy grew 3.1 percent from a year earlier in the first quarter as surging non-energy output outweighed a decline in energy production.
Government spending has grown “rapidly” in recent years and will reach 40 percent of gross domestic product in 2013, according to Fitch, which said that maintaining a similar pace would undermine public finances and erode Azerbaijan’s net asset position in the medium term.
Fitch said the country’s oil production has peaked and output will fall “relatively steeply” in the next decade, curbing the government’s ability to save energy revenue for the future and invest to promote non-oil activity.
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