BAKU, Azerbaijan, Aug. 27
By Eldar Janashvili – Trend:
As with many other sovereigns, countering the economic impact of the coronavirus pandemic in Azerbaijan has necessitated a temporary suspension of the government's fiscal rule, Trend reports referring to Fitch Ratings.
"Despite the severe adverse impact on the fiscal deficit, large savings provide Azerbaijan with a significant degree of financing flexibility," Fitch Ratings added. "The consolidated budget deficit will be primarily financed by a drawdown of the State Oil Fund of Azerbaijan’s (SOFAZ) assets and the large cash deposits in the government's single treasury account."
"SOFAZ assets were broadly flat over the first six months of 2020, ending June at $43.2 billion, with changes in the value of its portfolio offsetting lower oil revenues and transfers to the budget," Fitch Ratings said. "With nominal GDP falling in US dollar terms and its portfolio primarily in foreign currency-denominated assets, SOFAZ assets will remain in excess of 85 percent of GDP."
Fitch Ratings revised the forecast on Azerbaijan's ratings from stable in April 2020 to negative, which reflects strengthening of external pressure in connection with a sharp drop in oil prices and an increased risk of disorderly devaluation of the manat.
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