Fitch Ratings has affirmed Armenia’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘B+’ with a Stable Outlook, the agency said on Friday.
Armenia’s ‘B+’ IDRs reflect strong per-capita income, governance and business environment indicators relative to peers, as well as a robust macroeconomic and fiscal policy framework and credible commitment to reform, underpinned by IMF support. Set against these strengths are a high share of foreign-currency denominated public debt, relatively weak external finances, and geopolitical risks.
“The Ukraine conflict and sanctions on Russia have triggered a substantial migration of Russian, Ukrainian and Belarusian citizens to Armenia since March, with visitor numbers rising 515% yoy in 1H22. This is further supported by a 200% yoy increase in money transfers from Russia to Armenia in 1H22. A large proportion of the migrants are believed to be highly educated professionals, particularly from the information and communications technology sector. These trends helped boost growth 13% yoy in 2Q22 (1Q22: 8.7% yoy) and should provide momentum in 2H22. Fitch has upped its real GDP growth projections for 2022 to 6.4% as remittances boost personal consumption, and export performance (particularly to Russia) holds up. Fitch expects growth will average 4.7% in 2023-24,” Fitch said.
Improved confidence in general government debt/GDP returning to a firm downward path over the medium term, as well as a sustained improvement in external indicators are among the factors that could, individually or collectively, lead to positive rating action.
