Fitch downgrades Azerbaijan’s credit rating to junk status

Azerbaijan’s credit rating was cut from BB+ to BBB-  by Fitch Ratings late last week as the former Soviet Union’s third-biggest oil exporter is expected to see its economy shrink for the first time in seven years amid a collapse in the price of crude. The rating had been lowered to BB+ from BBB-, Fitch said in a statement on Friday. “Low oil prices have caused a significant deterioration in the fiscal position,” the Fitch analysts said. “A failure to adjust expenditure or revenue to the lower oil price environment” could trigger additional negative rating action, they predicted.
Azerbaijan’s GDP shrank by 3.3%  in January from a year earlier as both oil production and prices fell, according to the State Statistics Committee. Fitch is now forecasting that the country’s GDP gross domestic product will decline by 3.3% this year.
Last Tuesday, the country’s parliament halved  its oil-price projection from $50 a barrel to $25 but increased  planned budget expenditure by 13% to $11.8bn and revenue by 15.5% to $10.72bn.
After two devaluations, the manat lost more than 50% of its value  against the dollar last year, and in December the central bank announced a shift to a floating exchange rate after burning through more than half of its reserves over the course of 2015.

Source: News.AZ