Azerbaijan Celebrates Fitch’s Credit Rating Upgrade to BBB-

Fitch Ratings has upgraded Azerbaijan's long-term foreign currency issuer default rating to BBB- from BB+ with a stable outlook. This upgrade is seen as a recognition of Azerbaijan's macroeconomic and monetary policies, institutional reforms, and improvements in the investment environment. It also reflects the country's low government debt and low level of external public debt.

Azerbaijan's Ministry of Finance has welcomed the rating upgrade, noting that it underscores international confidence in the country's economic policies and reforms. According to Fitch, Azerbaijan's government debt is projected to increase to 22.7% of GDP by 2026, which remains one of the lowest among Fitch's investment-grade sovereigns. The increase follows a 10 percentage point rise to 21.8% in 2023 due to the recognition of previously domestically guaranteed debt.

Inflation in Azerbaijan is expected to remain below the central bank's target band of 4% in the first half of 2024, potentially increasing to 4.7% by 2026. The central bank has paused its monetary easing cycle since May, with no additional rate cuts expected due to inflationary pressures and increased government spending. The country's economy is forecasted to recover to a growth rate of 3.2% next year and 2.3% by 2026, driven in part by public investment.