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Russian Gazprombank expecting Azerbaijani sovereign rating's return to 'stable' outlook

Finance Materials 22 January 2021 17:53
Russian Gazprombank expecting Azerbaijani sovereign rating's return to 'stable' outlook

Baku, Azerbaijan, January 22

By Zeyni Jafarova – Trend:

The Standard & Poor's Global Ratings (S&P) will confirm Azerbaijan's ‘BB +’ sovereign rating and possibly the forecast will return to ‘stable’, Gulnara Khaidarshina, Deputy Head of Russian Gazprombank’s Macro Research and Strategy Department, said, Trend reports on Jan.22.

According to Khaidarshina, confirmation of Azerbaijan's ‘BB +’ rating will be facilitated by the continued macroeconomic stability and a high level of international reserves, sufficient to maintain the current rate of the manat in the medium term.

She also said that the revision of the S&P forecast may be due to the recent settlement in the Nagorno-Karabakh region (10 November Trilateral Statement between Azerbaijani, Russian presidents, and Armenian prime-minister on ending the 44-day war (from late Sept. through early Nov.2020) in the region between Armenia and Azerbaijan), following which large-scale infrastructure projects are planned in the region.

“Moreover, these projects are additional drivers for the growth of the Azerbaijani economy in 2021,” Khaidarshina added.

The bank’s representative pointed out that new projects of Azerbaijan in the region, for which 2.2 billion manat ($1.3 billion) from the state budget are provided and which affect the reconstruction or modernization of energy, utilities, transport infrastructure, as well as socially significant facilities in the spheres of education and healthcare, allow neutralizing the factor of uncertainty in fiscal policy, indicated in the early forecasts of the S&P.

"According to our estimates, the new fiscal incentive can add about one percentage point to the growth of Azerbaijan's GDP in 2021," she summed up.

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