The level of government on-lending and guarantees was broadly unchanged in Azerbaijan over the last year, at 31.5% of GDP at end-1Q21, close to three-quarters of which comprises gas investment projects and the 2017 restructuring of International Bank of Azerbaijan (IBA; B/Positive), Report informs, citing Fitch Ratings.

“The government has taken a first step towards improving corporate governance in state-owned enterprises through consolidation of reporting and monitoring in the newly-established Azerbaijan Investment Holding, but a material reduction in risk will require progress in their restructuring. Contingent liability risk from the state oil company SOCAR is mitigated by a low oil production break-even price averaging around $15 per barrel, but its large FX mismatch is a source of vulnerability,” the agency said.

General government debt/GDP, which rose 2.4pp in 2020 to 21.4% is projected to decline to 17.6% at end-2022, and is well below the current ‘BB’ median of 60%.