Fitch lowers rating of Azerbaijan due to the fall in oil
New York – The rating agency Fitch lowered the rating Friday of Azerbaijan whose economy is hit by falling oil prices and its budgetary implications.
the note was revised down a notch to BB + and receives a negative outlook, which means it could be further degraded.
Fitch expects the fiscal deficit, which was 5.3% of gross domestic product (GDP) in 2015 will increase to 12.5% this year before returning to 7.5% in 2017. revenues from oil and gas, which accounted for over 50% of state revenues over the last five years have fallen by some 40% in 2015 and should decline further to 30% in 2016.
the devaluation decided by the Baku authorities also contributes to increasing social pressures and the government plans to increase spending aimed at the most disadvantaged sections of the population to about 2% of GDP this year, says Fitch .
Before this decision to devalue, the manat’s defense policy has also reduced the reserves of the Central Bank.
Fitch expects that GDP will contract by 3.3% in 2016 and that inflation will reach 14% with a pronounced weakness of the banking sector.
However, growth should rebound in 2017 and especially in 2018 with the opening operation of the gas field Shah Deniz 2.
The rich former Soviet republics hydrocarbon suffer doubling of oil prices collapse (-60% since the summer of 2014), fell last week to the lowest level in seven years.
in addition to direct drop in their income, they are affected by the recession in Russia, too dependent on oil and gas, with which they maintain close trade links
(© AFP / February 27, 2016 1:00).
(AFP / 02.27.2016 1:10) ->
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