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


At the same time, Fitch affirmed the Short-Term Foreign-and Local-Currency IDRs at ‘B’ and the Country Ceiling at ‘BB-’.

Armenia’s outlook reflects the country’s credible monetary policy framework and stronger income per capita on the one hand, and a rising public debt burden and tensions in relations with some neighboring countries on the other.

According to Fitch, the positive outlook stems from the start of a fiscal consolidation process that we expect will deliver a gradual decline in government debt over the medium term. Fitch notes that the transition process has been peaceful and in line with constitutional mechanisms..

“Growth is forecast to ease to 4.2% in 2019 and 4.0% in 2020, with the forecast 2018-
2020 average of 4.4% higher than the 3.6% current ‘B’ median for the same period. The halt of gold mine operation by foreign investors (Amulsar – Banks.am) due to environmentalist protests creates uncertainty in the sector,” said the agency.

Fitch projects the state budget deficit to decline to 2.2% of GDP (4.3% current peer median) from 4.8% in 2017. The rating agency noted that the new Armenian government is hoping to build fiscal space to allow higher but deficit-neutral allocations to social spending and public sector wages.

General government debt/GDP is forecast to fall to 56.2% at end-2020 from 58.9% at end-2017.

At the same time, Fitch expects inflation to average 2.7% in 2018 and move toward the medium-term target in 2019, still below the forecast 5% for the current ‘B’ median.

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


Yerevan’s ratings remain 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 the agency.

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