On July 26, 2024, the Rating Agency "Fitch" has reaffirmed the sovereign "BB-" rating of the Republic of Armenia for the issuance of long-term obligations in foreign currency with a stable outlook.
The rating is based on per capita income and management indicators comparable to the countries being compared, stable prospects for economic growth, and a strong macroeconomic policy framework of the country.
According to the Agency's assessment, migration from Russia, Belarus, Ukraine, and now also from Nagorno Karabakh continues to have a positive effect on economic growth. The tourism, information and communication technology sectors are expected to be important growth drivers. The start of operation of the Amulsar gold mine from 2025 will also have a positive effect on exports and growth. Thus, the Agency expects economic growth of 6%, 5.5% and 5.1% for 2024-2026 respectively.
The Agency also referred to the increase in expenses for addressing the needs of people forcibly displaced from Nagorno Karabakh, defense and capital projects, as a result of which “Fitch” in 2024 expects the state budget deficit to be 4.5% of GDP. According to the Agency's forecasts, in 2025, along with the above-mentioned factors, the introduction of a comprehensive health insurance system will lead to additional spending pressures, which will increase the budget deficit/GDP ratio to 5.4%. For 2026, however, the Agency expects a deficit of 4.2% of GDP, due to reduced refugee-related costs and increased budget revenues as a result of tax reforms.
The Agency forecasts a government debt-to-GDP ratio of 48.7% at the end of 2024 and a stabilization of around 50.5% in 2026, which is below the 55.2% average for comparable countries.
The Agency also referred to existing geopolitical risks, dollarization of the banking system, foreign finances and inflation.
You can read the report at the following link.