BAKU, Azerbaijan, June 14. Fitch Ratings has confirmed that Azerbaijan’s credit rating reflects a very strong external balance, the lowest government debt level among ‘BBB’ rated countries, and high financing flexibility thanks to substantial sovereign assets, Trend reports.
The agency projects that Azerbaijan’s total international reserves and State Oil Fund (SOFAZ) assets will reach $74 billion by the end of 2025 — equivalent to 98.4% of GDP. SOFAZ assets are expected to stabilize around $62 billion (79.3% of GDP) in 2025–2026, based on an average oil price of $65 per barrel.
Net external sovereign assets are forecast to average 67% of GDP over this period — well above the median for both ‘BBB’ and ‘A’ rated countries.
Despite expected declines in oil prices, Azerbaijan’s current account is forecast to remain in surplus, at 5.3% of GDP in 2025 and 4.9% in 2026. By comparison, the average surplus for 2021–2024 was 15.6%, while the median for ‘BBB’ rated countries is just 0.4%. Fitch points to potential growth in oil exports in the medium to long term from the development of the Karabakh field and emerging onshore shale oil projects.
However, Fitch expects the state budget to move into deficit starting in 2025 due to pressure on oil revenues, still-high (though gradually decreasing) capital spending tied to Karabakh reconstruction, and increased defense and social expenditures. That said, the agency leaves room for a more optimistic outlook if non-oil revenues exceed targets and capital spending comes in lower than expected.
Fitch praises Azerbaijan’s commitment to fiscal discipline, highlighting a fiscal rule aimed at cutting the non-oil primary deficit to 13% of non-oil GDP by 2029 — down from 20.4% in 2024. Currently, non-oil revenues make up about half of all budget revenues, with the government targeting a rise to 65% by 2029. Fitch cautions that achieving this depends on sustained growth in the non-oil economy, which remains uncertain.
Gross government debt stood at 20.4% of GDP at the end of Q1 2025 and is expected to average 21.5% in 2025–2026 — among the lowest levels for Fitch-rated investment-grade countries. Key fiscal buffers include large government deposits (10.4% of GDP in 2024) and SOFAZ assets (81% of GDP).
Fitch also notes reduced vulnerability to currency risk: foreign currency debt fell to 32% of total debt by the end of 2024, down sharply from 95% in 2017, while total external debt shrank by 41.5% in absolute terms.
On monetary policy, Fitch highlights the Central Bank of Azerbaijan’s growing ability to manage structural liquidity surpluses in the banking system and improve monetary policy transmission.
Finally, Fitch notes that maintaining the manat’s de facto peg to the US dollar remains a top political priority for Azerbaijani authorities.