S&P affirms Azerbaijan's credit rating

S&P said: "Our ratings on Azerbaijan remain supported by the sovereign's strong external and fiscal positions, primarily reflecting the sizable foreign-invested sovereign oil fund SOFAZ, which has assets in excess of $35 billion (about 60%

of estimated 2015 GDP). 

"Nevertheless, we forecast a steady downward trend in the government's net asset position to below 50% of GDP. In our view, this could weaken the economy's capacity to counter potential economic shocks.

"The ratings are constrained by Azerbaijan's modest income levels, relatively weak institutional effectiveness, and limited monetary flexibility. We believe the latter has reduced further in the aftermath of the February manat devaluation. Rapid dollarization of the economy has occured over the last several months.

"In our view, the economy is currently facing a number of pressures related to the sizable decline in the oil prices over the last year. Azerbaijan remains heavily dependent on the hydrocarbons sector, which amounted to about 40% of GDP and 95% of merchandise exports in 2013-2014."