BAKU, Azerbaijan, July 27. International authoritative rating agency Fitch Ratings expects that Azerbaijan's fiscal policy will be consistent with maintaining the country's robust sovereign assets, the statement of Fitch Ratings said, Trend reports.
“We expect Azerbaijan's fiscal policy to be consistent with maintaining robust sovereign assets and avoiding the build-up of macroeconomic imbalances while maintaining adequate tools to manage oil price volatility,” the statement of Fitch noted, associated with the upgrade of Azerbaijan's rating.
According to Fitch's experts, the authorities will maintain their commitment to reducing the dependence of public finances on oil by reducing the non-oil primary deficit over the medium term and expect consolidated fiscal surpluses to continue, albeit declining.
“Fitch believes that strengthened sovereign external buffers, supported by more prudent fiscal policy compared to previous periods of high oil prices, improve Azerbaijan's resilience to external shocks and oil price volatility,” the statement of the rating agency reads.
Meanwhile, Fitch believes that achieving the non-oil GDP deficit target of 17.5 percent by 2027 could prove challenging due to the so-far limited measures to boost non-oil revenue growth.
The rating agency notes that the Azerbaijani Central Bank's strengthened capacity to manage domestic liquidity, enhanced tools to manage foreign exchange demand, and improved banking sector health, including reduced exposure to currency risk in the context of lower external debt and financial dollarization, ensure that it does not pose risks to macro-financial stability or sovereign balance sheet deterioration.
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