Fitch Affirms Turkmenistan's Rating at B+, Outlook Positive
The international rating agency Fitch Ratings has affirmed the long-term issuer default rating (IDR) of Turkmenistan in foreign currency at 'B+' with a 'Positive' outlook.
"The rating is supported by Turkmenistan's very strong sovereign balance sheet with the lowest public debt and the highest sovereign net foreign assets (SNFA)/GDP in the same group, underpinned by the world's fourth-largest gas reserves," the agency said in a statement published August 4.
The fiscal balance is also improving, with revenues up 16% in the first half of 2023 (with natural resource and income tax revenues up 47% and 21%, respectively) and spending down 5%. All gas exports are carried out under long-term contracts without sale on the spot market, which has reduced the benefit from last year's surge in world prices, but continues to support revenue growth.
Fitch expects a gradual increase by 2025 in Turkmen gas production, which accounted for 62% of exports in 2022. China accounted for almost 80% of gas exports in 1H 2023, and plans are underway to build a fourth branch of the gas pipeline to increase the country's capacity from 40 to 70 bcm.
Fitch forecasts acceleration of GDP and economic growth in Turkmenistan, further development of the processing industries and high capital investments associated with the development of the city of Arkadag.
The agency also notes that the government has stepped up international cooperation and has made progress towards WTO accession.
In February 2023, Fitch Ratings changed the outlook on the long-term issuer default rating of Turkmenistan in foreign currency from "Stable" to "Positive" and confirmed it at "B +".
A B+ rating means that the country is in the middle of the positive rating group, and shows a strong balance sheet with significant natural resources. The public rating is used by banks and other organizations, including those who wish to receive an independent assessment of the possibility of investing in the country.
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