Fitch Ratings has affirmed Azerbaijan's Long-Term Foreign Currency Issuer Default Rating (IDR) at "BBB-" with the outlook stable.
SİA informs via Fitch Ratings that Azerbaijan's rating reflects its very strong external balance, one of the lowest government debt levels in the "BBB" rating category, and substantial sovereign assets that provide financing flexibility."
On the other hand, constraining factors include high dependence on the hydrocarbon sector, persistent geopolitical risks, and an economic policy framework that, while improving, remains vulnerable.
Fitch also raised Azerbaijan's country ceiling from "BBB-" to "BBB," noting reduced currency control risks. Positive factors highlighted include adequate foreign currency supply in the economy, decreasing dollarization of the financial system, improved liquidity management by the Central Bank, and robust foreign exchange reserves and State Oil Fund assets denominated in foreign currencies, which support exchange rate stability.
According to Fitch's proprietary Sovereign Rating Model (SRM), Azerbaijan received a calculated score corresponding to "BB+"; however, the final rating was upgraded to "BBB-" based on additional factors.
The report states that the country ceiling, set one notch above the IDR rating, reflects moderate risks of capital or foreign exchange transaction restrictions. Fitch did not apply additional qualitative adjustments to the model results.
Fitch outlines several conditions that could lead to an upgrade of Azerbaijan's rating. These include further strengthening of economic and institutional policies that enhance resilience to external shocks; sustainable growth of sovereign assets amid high oil and gas revenues; and successful implementation of structural reforms aimed at improving governance, growth, and economic diversification.
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