Fitch Ratings has upgraded Turkmenistan’s Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) to ‘BB-‘ from ‘B+’. The Outlook is Stable.
A full list of rating actions is at the end of this rating action commentary.
KEY RATING DRIVERS
The upgrade reflects the following key rating drivers and their relative weights:
HIGH
Strengthened Sovereign Balance Sheet: There has been a further improvement in Turkmenistan’s already exceptionally strong sovereign balance sheet, and Fitch has greater confidence this will be preserved. The government has exercised markedly more expenditure discipline than in previous cycles of high energy prices, and we anticipate the fiscal position to remain close to balance through 2026. Fitch forecasts sovereign net foreign assets (SNFA) to increase to 55.9% of GDP at end-2024, from 54.7% in 2023 (and 45.1% in 2022), the highest in the peer group.
Extremely Large External Reserves: Turkmenistan’s foreign-exchange (FX) reserves have continued to increase, estimated by Fitch at near 55 months of current external payments (CXP) versus the ‘BB’ median of 4.5 months, the highest by a distance of any sovereign we rate. We project a moderation in the pace of SNFA growth through 2026 driven by a narrowing current account surplus, to 1.4% of GDP in 2026, from 5.3% in 2023, on lower global energy prices. Fitch forecasts a further improvement in external liquidity, with external debt service falling to 6.9% of current external receipts in 2025, from 8.5% in 2023, well below the current ‘BB’ median of 12.2%.