On July 4, the international rating agency Moody's upgraded Azerbaijan’s sovereign credit rating from "Ba1" to "Baa3," assigning the country an investment-grade rating with a "positive" outlook. The agency stated that the outlook reflected expectations that ongoing reforms could further reduce Azerbaijan’s economic and fiscal dependence on the hydrocarbon sector.

Moody’s highlighted prospects for enhanced institutional strength, governance, and financial sector stability. The agency noted that rapid growth in the transport sector, along with development in the Karabakh and Eastern Zangezur regions, supports prospects for further economic diversification. Moody’s also pointed to Azerbaijan’s strong government balance sheet, low debt burden, and high debt affordability as key credit strengths.

Azerbaijan's Reaction

Mikayil Jabbarov, the Minister of Economy of Azerbaijan, attributed the upgrade to the rapid revenue growth of the non-oil and gas sectors and a marked reduction in the state budget’s reliance on hydrocarbon revenues. "The achievements of Azerbaijan’s economic and financial bodies under the leadership of President Ilham Aliyev continue to gain recognition at the international level," Jabbarov stated. He concluded that improvements in the investment climate and business environment are attracting increasing foreign interest, laying the foundation for sustainable long-term growth.