Fitch upgrades Turkmenistan's rating to BB-

​​​​​​​By Ovunc Kutlu

ISTANBUL (AA) - Fitch Ratings said Friday it upgraded Turkmenistan's long-term foreign currency issuer default rating to BB- from B+ with a stable outlook.

The rating agency said the upgrade reflects further improvement in Turkmenistan's "exceptionally strong" sovereign balance sheet.

It said the government has exercised more expenditure discipline than in previous cycles of high energy prices, adding it anticipates the fiscal position remaining close to balance through 2026.

Turkmenistan's foreign exchange reserves have continued to increase, while a general government surplus of 0.2% of GDP is expected in 2024, it added.

"We assume debt to remain entirely foreign-currency denominated, in line with the government's strategy since it prepaid all outstanding domestic debt in 2022," it said in a statement.

The agency forecasts the country's fiscal balance moving into a small deficit, 0.5% of GDP in 2026, partly reflecting a lower oil price of $65 per barrel, which is the main reference price for Turkmen natural gas contracts.

It projects inflation to average 4.1% in 2024 due to higher food prices and 6.5% in 2025.

Fitch estimates GDP growth ticking up to 2.2% in 2024, from 2% last year, and to average 2.1% in 2025-2026.