Azerbaijan’s public debt remains among the lowest in Fitch Ratings

Azerbaijan's public debt has reached 21.1% of its GDP and is projected to rise to approximately 23.3% by 2026, according to Fitch Ratings' recent assessment of the country’s economic outlook.

This debt level remains one of the lowest among sovereign nations with investment-grade ratings, reflecting a strong external balance sheet and a robust financial position, supported by substantial sovereign wealth fund assets, Caliber.Az reports citing the agency.

The agency states, "We estimate that government debt stands at 21.1% of GDP and will approach 23.3% by 2026, marking one of the lowest ratios among Fitch's investment-grade sovereigns. Azerbaijan’s external debt has decreased in recent years, with a more favourable currency composition. Around two-thirds of this debt is owed to official creditors. External government guarantees and on-lending have also decreased to $5.6 billion (7.6% of the estimated 2024 GDP), down from $6.4 billion in 2022. Notably, 77% of this debt is tied to the Southern Gas Corridor project, which is profitable and unlikely to require additional sovereign support."

Despite a reduction in Azerbaijan's current account surplus, which is expected to be 6.5% of GDP in 2024, the surplus remains among the highest within the "BB" rating category. Even with projected lower oil prices, the country is anticipated to continue increasing its foreign exchange reserves, with an average current account surplus of 6.2% of GDP in 2025-2026. Azerbaijan's external creditor position is forecasted to be one of the strongest in the world, reaching 153% of GDP in 2024.

Azerbaijan’s economic growth is estimated to have accelerated to 4.1% in 2024, bolstered by stabilization in oil production and the reconstruction of Karabakh. However, growth is expected to moderate in the coming years, with projections of 3% in 2025 and 2.4% in 2026, as public investment impacts diminish and oil output growth slows.

By Tamilla Hasanova