Moody`s raises Azerbaijan ratings
Baku, April 20 (AZERTAC). Moody`s Investors Service has today upgraded Azerbaijan`s foreign-and local-currency government issuer ratings by one notch to Baa3 from Ba1. The rating outlook is now stable. The main drivers of this rating action were: (i) the ongoing strengthening in the government`s finances, as reflected in the rapid accumulation of foreign assets by the State Oil Fund of Azerbaijan (SOFAZ) and the Central Bank of Azerbaijan (CBA); and (ii) the strong performance of Azerbaijan`s non-oil sector in recent years as a result of government investment activities and efforts to improve the business environment and diversify the economy away from the oil sector. The first driver of Moody`s decision to upgrade Azerbaijan`s ratings into investment grade is the significant improvement in the government`s financial strength in recent years. High oil prices have helped the government accumulate considerable foreign assets in both SOFAZ, the country`s sovereign wealth fund, and the reserves of the CBA.
Moody`s believes that this level of foreign assets will help shield Azerbaijan`s economy from future adverse impacts arising from internal or external shocks. The second driver underlying today`s rating action is the strong performance of Azerbaijan`s non-oil sector, which has benefited from the boom in oil revenues. High government spending on upgrading Azerbaijan`s infrastructure and developing new industries helped non-oil sector output expand by 9.4% last year, up from 7.9% in 2010.
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