Baku, November 28, AZERTAC

“Azerbaijan has been able to attract considerable investor interest into the renewable energy sector for both onshore and offshore projects,” said Erich Arispe, Senior Director and the Head of Emerging Europe in Fitch Ratings' sovereigns group, in an exclusive interview to AZERTAC.

AZERTAC presents interview:

- How would you assess the current macroeconomic situation in Azerbaijan?

- In July, Fitch Ratings upgraded Azerbaijan to ‘BBB-’ with a Stable Outlook, reflecting the sovereign’s robust external balance sheet, which is stronger relative to rating peers and to when Azerbaijan was first upgraded to investment-grade in 2010. We also noted that a prudent fiscal policy relative to previous cycles of high oil prices and reduced foreign-currency (FC) vulnerabilities will help avoid the build-up of macroeconomic imbalances and preserve adequate policy buffers to manage oil price volatility.

- In your opinion, what factors and sectors of the economy have been the key drivers of economic growth in the country in recent years?

- Growth has been driven by the non-oil economy in sectors related to transportation, most notably in 2022, agriculture or construction, especially that related to the reconstruction and development of Karabakh. The continued investment in Karabakh will support domestic demand.

- What will be the basis of the country's new economic model?

- The government has supported sectors such as tourism, agriculture, ICT, logistics and transport – the latter two are related to efforts to capitalise on the development of the Middle Corridor linking China and Europe through Kazakhstan and the Caucasus. The government has also set up the Alat free zone to attract export-oriented investment.

- What is the potential of non-energy sectors?

- Significant capacity in renewables (wind and solar) is expected to come online, increasing the share of renewables in installed capacity to 33% in 2027 from 21% in 2023, thus potentially reducing the domestic consumption pressures on natural gas production.

- COP29, which will be held in Azerbaijan, will play an important role in determining further steps to combat climate change. What contribution can Azerbaijan make to the implementation of the global green agenda and how, in this light, do you assess the measures implemented in Azerbaijan to develop green energy?

- Azerbaijan has been able to attract considerable investor interest into the renewable energy sector for both onshore and offshore projects. In October 2023, Masdar’s Garadagh Solar generation plant (the largest in the region) began operation, and the company has also signed investment agreements for additional solar and wind generation. The country also aims to improve energy efficiency of power production.