SOFAZ assets nearly five times Azerbaijan's direct government debt Report by Moody's

The State Oil Fund of Azerbaijan (SOFAZ) holds assets that are nearly five times greater than the country’s direct government debt, says a report by international rating agency Moody's, which confirmed Azerbaijan's sovereign rating at Ba1 with a positive outlook.

Moody's analysts highlighted that the affirmation of Azerbaijan's Ba1 rating is underpinned by a robust government balance sheet, characterized by a low debt burden and a strong net asset position, Caliber.Az reports citing the agency.

"The availability of substantial fiscal treasury reserves minimizes the government's liquidity risks, which are already modest given the low gross borrowing requirements compared to similar countries," the report stated.

Moody's further noted that the strategic use of these fiscal buffers during the pandemic facilitated countercyclical spending, thereby limiting the deterioration of the government's fiscal and debt ratios.

Additionally, the report emphasized that these assets, denominated in foreign currencies and primarily invested in liquid fixed-income securities, provide significant external buffers that complement the foreign exchange reserves held at the Central Bank of Azerbaijan.