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Moody's upgrades Azerbaijan's credit rating to investment grade

04 July 2025 15:15 (UTC +04:00)

On July 3, Moody’s Ratings, the international credit rating agency, upgraded the sovereign credit rating of the Republic of Azerbaijan from Ba1 to Baa3 (investment grade) and maintained the positive outlook, APA-Economics reports citing the Ministry of Finance.

Moody’s — one of the leading international credit rating agencies — stated in its announcement that the positive outlook on the new rating reflects expectations of reduced economic and fiscal dependence on the oil and gas sector amid ongoing reforms in the country. Moreover, improvements in monetary policy, financial sector regulations, public financial management, and transparency in public administrative processes signal further enhancement of institutional governance. Low debt burden and net asset position alongside a strong government balance sheet and very high debt repayment capacity remain key strengths of the country.

The agency notes that Azerbaijan’s strong fiscal position and the consistent preservation of robust macroeconomic stability through global shocks and volatile oil prices continue to reinforce fiscal resilience. The positive outlook also encompasses potential ongoing improvements in accountability. Efforts to attract foreign investment are expanding, and reforms in legal and regulatory frameworks continue, contributing to greater transparency and accountability.

According to Moody’s, Azerbaijan’s sustained efforts to strengthen its position as a regional transportation and green energy hub enable steady and significant growth in non-oil sectors such as transport and logistics, construction, and tourism. Its favorable geographic location and increasing activity along the Trans-Caspian International Transport Route — Middle Corridor — will generate positive outcomes in the logistics sector and have a beneficial impact on other economic sectors by attracting substantial investments. Furthermore, the ongoing development of the Karabakh and Eastern Zangezur regions strongly supports economic diversification efforts. All these factors play a key role in the rating upgrade.

The agency assumes that despite economic diversification, Azerbaijan will continue to benefit from oil and gas revenues in the medium and long term. Alongside efforts to reduce dependence on budget transfers, the growing assets of the State Oil Fund will expand fiscal security and increase resources available to support the economy during shocks.

It is worth noting that during Moody’s representatives’ visit to Azerbaijan from May 19 to 21 this year, meetings were held with relevant state bodies, including the Ministry of Finance of the Republic of Azerbaijan. Based on the discussions and information presented, the rating agency reassessed the country’s credit rating.