Moody’s Investors Service (“Moody’s”) has today changed the outlook on Armenia’s rating to positive from stable and affirmed the B1 long-term issuer and senior unsecured debt ratings.
The positive outlook signals that a rating downgrade is unlikely over the next 12-18 months.
The positive outlook is underpinned by macroeconomic policies that should reduce Armenia’s vulnerability to external shocks. Moreover, ongoing reforms of the fiscal framework may shore up fiscal strength over time.
Moody’s has also raised Armenia’s long-term local-currency bond and deposit ceilings to Baa3 from Ba2. Armenia’s long-term and short-term foreign currency bond and deposit ceilings remain unchanged at Ba2/”Not Prime” and B2/”Not Prime”, respectively.
Moody’s has also outlined the risky factors which served a base for keeping unchanged the country’s rating and changing the outlook on Armenia’s rating from stable to positive.
The followings were mentioned as positive factors: (1) High, although fluctuating, GDP growth, (2) Strengthening institutions conducting macroeconomic stability assistance policy, (3) High level of affordability of state debt thanks to great share of privileged loans.
According to Moody’s upward pressure on Armenia’s rating would stem from further economic and/or institutional reforms that point to sustained improvements in economic competitiveness and institutional strength. Taking into account the government’s fiscal plans, Moody’s expects the government’s fiscal deficit to narrow to 2.6% of GDP in 2018 and 2.5% in 2019, from 4.7% in 2017. Moody’s also expects Armenia’s general government debt to gradually decline to 56.5% of GDP by end-2018 and 54.2% by end-2019.
