BAKU, Azerbaijan, July 6. The international rating agency Moody's has affirmed Azerbaijan's issuer and senior unsecured foreign currency ratings at Ba1 and improved the outlook from stable to positive, Trend reports via Moody.
"The positive outlook reflects improved prospects for economic diversification and macroeconomic policy effectiveness, which may lead to further strengthening of Azerbaijan's credit profile in line with the higher rating level," the information of the rating agency noted.
According to Moody's experts, the rise in the variety of tools to uphold macroeconomic stability suggests that the government and the Central Bank's actions have become more effective.
"The continuation of efforts to improve governance, if they prove effective, will further strengthen institutional effectiveness and confidence in policy over time," Moody's report says.
Analysts at the rating agency point to the growing role of the Middle Corridor as an important transportation hub between Europe and Asia and increased investment in infrastructure projects.
"This is driving the economic outlook, although the impact on economic strength will only become tangible over time," the report also noted.
Experts point out that Europe's higher demand for Azerbaijani gas, as well as an expanding list of renewable energy projects, will mitigate the consequences of the depletion of the country's oil resources.
Regarding the confirmation of Azerbaijan's rating at the Ba1 level, Moody explains it by citing the country's strong government balance sheet with a low debt burden and significant fiscal reserves held in foreign assets, which reduces the risks of government liquidity and external vulnerability.
However, the rating agency experts recommend improving the institutional management of the State Oil Fund's assets, which support the country's external and macroeconomic stability.
"Also, there is still a significant level of dollarization in the country's economy, and the currency is pegged to the dollar despite the de jure flexible exchange rate regime," Moody's information mentioned.
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