Fitch Ratings has affirmed Armenia’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘B+’ with a Positive Outlook. Fitch said in a press release that Armenia’s ratings balance a credible macro policy mix and stronger income per capita and governance indicators relative to peers against high public and external debt and tense relations with some neighboring countries.
The Positive Outlook reflects institutions that have underpinned macroeconomic and financial stability through a period of significant political change, a stronger growth outlook relative to peers, and a commitment to a medium-term program of government debt reduction.
“External vulnerabilities have re-emerged following a sharp widening of the current account deficit in 2018, although this may partly reflect statistical issues,” the agency’s analysts say.
They point out the confidence in the improvement of bases of the economic policy, management, and institutional effectiveness and sustainable improvement of external balance as key factors that can separately or together lead to updating the rating. It is also important to be confident that the ratio of the state debt to GDP is going down.
As key factors that can separately or together lead to the revision of ‘Stable’ outlook, the Fitch analysts point out the increase of outside risks, potentially connected with a high deficit of current account transactions and financial changes that can cause disability to ensure the midterm downward movement of the ratio of the state debt to GDP.
The analysts think that Armenia will continue enjoying a wide social and political stability. They don’t forecast a longstanding escalation of the conflict with Azerbaijan over Nagorno Karabakh to a level that could impact economic and financial stability.
