Fitch Ratings has affirmed Yerevan’s Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at ‘B+’ with Positive Outlooks and Short-Term Foreign-Currency IDR at ‘B’.


Yerevan’s ratings are constrained by those of Armenia (B+/Positive), in particular the country’s institutional framework for LRGs, which Fitch assesses as weak. “Weak institutions lead to lower predictability of Armenian LRGs’ budgetary policies, narrow their planning horizon and hamper long-term development plans,” said Fitch.

The ratings also factor in the city’s capital status, zero debt and satisfactory fiscal performance, supported by steady transfers from the central government.

The Positive Outlook reflects that on the sovereign ratings.

Fitch expects the city to continue posting a satisfactory fiscal performance with a single-digit operating margin in 2018-2020 (2017: 2.9%).

“We project improvement of the city’s operating margin on the back of economic growth projected over the medium term in Armenia. We also expect Yerevan to run a close to balanced budget in 2018-2020, in line with historical results (2017: surplus 0.7%),” noted Finch.

According to the agency, Yerevan’s fiscal performance remains dependent on financial aid from the central government (current transfers stood at 72% of the city’s operating revenue in 2017). Fitch’s experts believe the city will continue receiving financial support from the central government in line with its track record.

The city’s capex stood at 7.3% of total spending at end-2017 and will have a gradual improvement in capex realization up to 8%-9% of total expenditure in 2018-2020.