2024-03-07 02:27:03
“Fitch” rating agency has reaffirmed the sovereign “B+” rating of the Republic of Armenia for issuing long-term obligations in foreign currency and national currency, changing the outlook from “stable” to “positive”.
The report of the prestigious rating agency states that the revision of the perspective of Armenia’s sovereign rating is based on the positive dynamics of the economy and high economic growth, which was positively influenced by the significant inflow of people and capital, the overperformance of tax revenues and the reduction of the debt burden, and the improvement of the external position of the economy.
In particular, the high economic growth of Armenia, which in 2022 estimated at 11.6%, the highest in 15 years. The formation of high growth was influenced by the significant inflow of migrants and capital. The agency expects that a significant part of the migrants will stay in Armenia for at least two to three years, which will lead to the maintenance of positive economic developments.
A significant decrease in the budget deficit was also recorded, mainly due to the high growth of tax revenues. As a result, in 2022 The budget deficit/GDP indicator was 2.2% in 2021. against 4.6%. In addition, the government’s debt in 2022 decreased by almost 13 percentage points, making up 47.6% of GDP and expects to remain at that level in the medium term.
The improvement of the external position in the conditions of capital inflow, the surplus of the current account, which also contributed to the increase of foreign currency reserves by 880 million US dollars, is also positively evaluated. In addition, in 2022 net foreign debt decreased by about 12 percentage points and made 44.5% of GDP. In terms of external stability, the agency highlights a new three-year preventive program with the IMF worth USD 171 million, which can act as a buffer in case of negative external shocks.
At the same time, in the Agency’s view, Armenia stands out with strong governance indicators, as well as a solid macroeconomic and fiscal policy framework and a credible commitment to reforms.
The agency also noted the factors contributing to the further improvement of the sovereign rating, which are the continued reduction of the government’s debt-to-GDP ratio in the medium term and the maintenance of the external position and financial improvement recorded as a result of significant capital inflows in the medium term.