BAKU, Azerbaijan, Apr. 7
By Sadraddin Aghjayev - Trend:
Further implementation of economic reforms launched in Azerbaijan in the lead-up to the coronavirus shock and active regulatory restraint during the COVID-19 pandemic will improve banking regulation, maintaining the stability of the sector, Trend reports with reference to Moody's international rating agency.
Restrictions on currency risks, a solution regarding problem loans and recapitalization requirements have increased the stability of the country's banking sector.
The agency's statement also said that it is expected to resume reforms in the banking sector in 2021, including the introduction of the Basel principles on liquidity and risk management, to further strengthen the stability of the banking system in Azerbaijan.
At the same time, the effective use of fiscal buffers within the framework of fiscal rules can potentially reduce macroeconomic risks while deteriorating fiscal and debt indicators, the statement reads.
The agency did not include Aqrarkredit's debt in Azerbaijan's state debt, which at the end of 2020 amounted to about 13 percent of GDP. Moody expects that Aqrarkredit will continue to service its obligations without financial support from the state.
“Overall, political stability in Azerbaijan will reduce the government's liquidity risk, contain external vulnerabilities and provide flexibility, especially thanks to the country's status as a large net creditor and significant sovereign assets,” the statement said.
Earlier, Moody`s confirmed the long-term rating of the issuer and the rating of the priority unsecured obligations of Azerbaijan at the level "Ва2".