BAKU, Azerbaijan, Aug. 27
By Eldar Janashvili – Trend:
Fitch Ratings forecasts Azerbaijan's general government debt to increase by just 4.0 percentage points to 23.0 percent of GDP, with much of that resulting from a sharp fall in the denominator, Trend reports referring to Fitch.
The State Oil Fund of Azerbaijan's (SOFAZ) transfers to the state budget were increased to the equivalent of $7.2 billion from $6.7 billion, which will support the 1.7 AZN/USD de facto fixed exchange rate. SOFAZ sales of FX for manats to transfer to the budget are a key source of foreign currency and helped preserve exchange rate stability, notably in March 2020. The recovery in oil prices from their March/April lows has eased pressure on the exchange rate.
The 2020 economic growth assumption in the revised budget has been cut to -5.0 percent from 2.4 percent (close to Fitch's forecast of -4.2 percent) reflecting coronavirus containment measures and Azerbaijan's participation in OPEC+ oil supply cuts.
A renewed lockdown in July highlights the lingering risk of coronavirus in Azerbaijan and downside risks from further waves of infections and renewed lockdown measures, which could further pressure real GDP growth, said the agency.
Fitch Ratings revised the Outlook on Azerbaijan's ratings to Negative from Stable in April 2020, reflecting increased external pressures from the sharp fall in oil prices and increased risk of a disorderly devaluation of the manat.
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