Improvements In Azerbaijan's Monetary Policy Framework Promote Stability In External Position Moody's

(MENAFN- Trend News Agency) BAKU, Azerbaijan, January 17. Improvements in Azerbaijan's monetary policy framework promote stability in external position, Trend reports via Moody's.

“Azerbaijan's ratings, including its Baa3 long-term issuer ratings, are supported by the government's large net creditor position given sizeable financial assets held by the State Oil Fund of Azerbaijan (SOFAZ), the country's sovereign wealth fund, which provides a significant financial buffer and lowers government liquidity and external vulnerability risks. Its policy effectiveness is also improving, although from a low base. In particular, improvements in the monetary and macroeconomic policy framework promote stability in the external position and financial system soundness in the face of shocks, while effective deployment of fiscal buffers allows for countercyclical spending and limits the potential deterioration in the government's fiscal and debt metrics,” reads the latest report by Moody's.

The rating agency notes that Azerbaijan's economy maintained positive growth in 2025 amid lower global oil prices, albeit at a slower pace as compared to 2024.

“Real GDP grew by 1.6% year-on-year over the first eleven months and we expect full year growth to be around 1.5%. This performance reflects resilience in non-oil activities, which helped offset the persistent contraction in the oil and gas sector. Meanwhile, we expect softer oil prices and increased expenditure to result in a narrowing of the consolidated fiscal surplus - which includes the revenues and expenditures of the Nakhchivan region, various social-related funds, and the State Oil Fund of Azerbaijan (SOFAZ) - to about 2.4% of GDP in 2025 from 4% in 2024. The state budget is likely to record a mild deficit, driven by accelerated spending on infrastructure, reconstruction, and social programmes. The relatively narrow state deficit will keep the government's debt burden well contained below 30% of GDP as targeted by the latest medium-term fiscal framework, remaining significantly lower than the median for similarly rated peers,” the report reads.

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