Azerbaijan’s Sovereign Rating Could Be Downgraded

The analytical review of Sberbank Investment Research noted that last year Azerbaijan spent foreign exchange reserves of $ 8.8 billion, as a result of which their volume reduced to $ 5 billion. In 2016, continued weakening of the manat - since early January AZN lost another 4.2%, despite extensive foreign exchange intervention of the Central Bank of Azerbaijan and capital controls.

The banking system is also experiencing strong pressure - from 18 to 27 January the licenses of 6 banks were revoked. It is not surprising that it happened now, since on February 1 it is planned to remove the limits on deposit insurance. According to the survey, the decline in oil prices negatively affects the country's economy, and the growing imbalance has forced the Finance Ministry to seek opportunities to raise capital.

The government expects to attract 100 million manats ($ 61 million) from privatization. In addition, the domestic market will be placed bonds denominated in the local currency and equivalent to $ 245 million and in foreign currency of $ 500 million. Azerbaijan also asked the IMF and the World Bank for help. In addition, Finance Minister Samir Sharifov announced that in February there will be government-guaranteed placement of bonds worth $ 2 billion. The raised funds will be spent on construction of the Southern Gas Corridor, the review emphasizes.

As a result of this, the creditworthiness of the state will increase, while today the international S & P agency plans to revise the sovereign credit rating of Azerbaijan, mainly provided by SOFAZ assets ($ 34.7 billion by October 1, 2015). In addition, the country has a moderate public debt (the external debt of the state amounted to $ 6.7 billion by October 1). --17D-