Azerbaijan's sovereign balance sheet is one of the strongest among rated sovereigns and underpins the rating, Fitch Ratings said.

SOFAZ accumulated USD1.7bn in 2013 to reach USD35.9bn (49% of GDP) by end-2013. International reserves of the Central Bank of Azerbaijan (CBAR) are a further USD14.4bn. Fitch expects further modest growth in sovereign assets, providing a buffer against oil price or production shocks.

Fitch estimates the current account surplus at nearly 18% of GDP in 2013, driven by a wide trade surplus. The current account surplus will narrow but remain in excess of 10% of GDP in 2015.

Fitch expects growth to moderate to 3%-4% in 2014-2015, as the government seeks to rein in capital spending. Real GDP grew 5.8% in 2013 with non-oil growth exceeding 10%. Inflation will rise from recent lows after the government raised fuel prices in December. The real effective exchange rate has appreciated owing to Russian rouble and Turkish lira weakness. The Azeri manat remains pegged to the US dollar, backed by large CBAR reserves.

ANN.Az