Moody's: Azerbaijan’s economy has strong medium-term growth potential
Azerbaijan, Baku, March 27 / Trend A. Akhundov /
Moody's international rating agency stressed the existence of strong potential for Azerbaijan's medium-term economic growth.
"However, given the country's large oil and gas reserves, Azerbaijan's medium-term economic growth potential is strong although a lack of economic diversification could hinder growth in the long term if not addressed," the agency said.
Financial robustness is ranked high, with government debt ratios expected to remain low in the medium term.
"Azerbaijan runs a large current account surplus, which is estimated at 27.2 percent in 2011, slightly below its 2010 level of 29 percent as a result of a temporary disruption in oil production," the message said. "The government's State Budget usually targets a modest deficit in the government's financial balance (1.5 percent of GDP in the 2012 State Budget) as part of an active policy to develop the country's domestic capital market.
The consolidated budget however, (which includes the State Oil Fund's - SOFAZ's - revenues) usually registers sizeable surpluses which for 2011 is estimated at 9.8 percent.
"Azerbaijan's susceptibility to event risk is considered to be moderate, largely due to political risks reflecting geopolitical tensions with the autonomous region of Nagorno-Karabakh and its supporter, Armenia, the message said. "Economic and financial event risks, on the other hand, are both ranked very low. The outlook on the government's bond ratings is positive which reflects our expectations of further improvements in Azerbaijan's already strong government finances as well as the country's institutional capacity supporting the prudent management of its oil windfall."