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Fitch predicts growth in foreign direct investments in Azerbaijan

Finance Materials 15 May 2021 15:35 (UTC +04:00)
Fitch predicts growth in foreign direct investments in Azerbaijan

BAKU, Azerbaijan, May 15

By Fidan Babayeva – Trend:

Fitch international rating agency projected growth of foreign direct investments in Azerbaijan to average 1.7 percent of GDP in 2021-2022, Trend reports on May 15 referring to a source in the agency.

According to Fitch, the current account is expected to return to surplus of 5.9 percent of GDP in 2021 and 4.7 percent in 2022 (following a 9.6pp (percentage points) deterioration in 2020 to a deficit of 0.5 percent of GDP), largely reflecting the higher oil price.

“We forecast the sovereign net foreign asset position increases to 84.9 percent of GDP at end-2022 from 83.1 percent at end-2020, compared with the 'BB' median of -3.7 percent. The risk of a disorderly devaluation, already assessed as low at our previous review, has fallen further,” the agency’s analysts said.

Besides, according to the agency, general government debt of the country, which rose 2.4pp in 2020 to 21.4 percent, is projected to decline to 17.6 percent at end-2022.

“The government plans to introduce a revised fiscal rule taking effect in 2022, which we anticipate will comprise an annual reduction in the non-oil primary balance, a debt target, and $200 million annual decline in the SOFAZ transfer to the budget. Credible and consistent implementation could help to anchor public finances and preserve buffers in the medium term,” summed up the agency.

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