Fitch: Currency transfer restrictions not to affect Azerbaijan’s rating

Baku, Azerbaijan, Jan. 23

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Azerbaijan's introduction of capital controls does not automatically have consequences for its 'BBB-'/Stable sovereign rating, Fitch international ratings agency said.

Low debt and substantial external assets still support the rating, the agency's report said.

The authorities this week imposed a 20-percent tax on some transactions where foreign currency leaves the country.

"The move reflects the challenge of dual policy goals - preserving the value of State Oil Fund of Azerbaijan (SOFAZ) assets, and supporting the currency to maintain price and social stability," the report said.

The measures will support the manat and reduce the pressure on buffers, which are a key strength of Azerbaijan's credit profile, according to the report.

Fitch said that Azerbaijan's external balance sheet is strong.

The agency stressed that the national currency rate change in 2015 almost exactly offset the first-order fiscal impact of the dollar fall in oil prices.

Pensions, benefits and public-sector salaries have been increased and VAT on bread and flour removed, according to the report.