S&P assessed the prospects for economic growth

Baku/01.22.22/Turan: The international rating agency S&P Global Ratings has confirmed the long-term issuer default ratings (IDR) of Azerbaijan in foreign and local currencies at the level of "BB+/B". According to the agency's statement, the outlook on the ratings was confirmed as "stable", according to the agency's press release.

S&P analysts believe that Azerbaijan's budgetary and external fiscal position remains one of the strongest among sovereign states, which are rated in the 'BB' category. The government has significant liquid state assets at its disposal, projected to average around 70% of GDP through 2025. According to the agency's forecasts, Azerbaijan's public debt in the medium term will be below 30% of GDP.

The currently favorable oil prices also support Azerbaijan's financial condition and balance of payments, the report goes on to say. According to S&P, Azerbaijan's economy will grow by 2.7% in 2022 after a strong recovery of 5.6% in 2021. However, the average annual growth of the country's economy in 2023–2025 is projected at 1.3%.

Medium-term growth prospects are weaker as oil production declines due to aging oil fields, and growth in gas exports is likely to only partially offset this trend, S&P said. Overall, the agency's analysts note that Azerbaijan's ratings are still constrained by weak institutional effectiveness, the country's narrow and concentrated economic base, and limited monetary policy flexibility.

In general, the long-term prospects for the country's economy look less favorable. Azerbaijan, according to S&P experts, is one of the oldest oil producers in the world and existing oil fields are aging and show a continuing decline in production. -06B-