Baku, Azerbaijan, Feb. 28
By Azad Hasanli - Trend:
Fitch expects official foreign exchange reserves of the Azerbaijani Central Bank to rise to 4.9 months of import cover.
The Central Bank's official foreign exchange reserves hit $6.1 billion or 3.4 months of import cover at end-2015, the statement said.
Fitch expects annual average consumer price inflation to reach 14 percent year on year in 2016.
However, the banking sector is small enough for the authorities to easily provide support if needed, with assets of 50 percent of GDP.
Fitch expects that import compression will help it maintain current account surpluses of around five percent of GDP in 2016-2017.
Restoration of price competitiveness following the devaluation should aid non-oil growth, particularly in tourism and agriculture.
The main factors that, individually or collectively, could trigger positive rating action are an improvement in the budgetary position, improvements in governance and the business environment.
Fitch assumes that Brent crude will average $35/b in 2016 and $45/b in 2017 and rise to long-term average of $65/b.
The issue rating on Azerbaijan's senior unsecured foreign currency bond has also been downgraded to 'BB+' from 'BBB-'.