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RAEX-Europe confirms the credit rating of Armenia at BB-, outlook positive

Rating-Agentur Expert RA has confirmed the sovereign government credit rating (SGC) of Armenia at ‘BB-’ (Sufficient level of creditworthiness of the government) in national currency and at ‘BB-’ (Sufficient level of creditworthiness of the government) in foreign currency.

The rating outlook is positive which means that in the mid-term perspective there is a high probability of upgrading the rating score.

The agency said fiscal underspending, as well as higher than expected budget income, caused the budget deficit to narrow further in 2019. Their estimation stands at 1,5% of GDP, which is 0,3p.p. lower than in 2018 and 0,7p.p. lower than the State Budget projections for the year.

The banking sector remains well-capitalized, with a strong liquidity, stable asset quality and subbed but positive profits.

The economy showed remarkable growth in 2019 with more then 7% real GDP growth in 3Q reported by the national statistical service of Armenia as a result of solid private consumption and investment, the report said.

“The confirmation of sovereign government credit ratings of Armenia at ‘BB-’ with positive outlook reflects the continued high economic growth supported by stabilization of the fiscal balance and drop of public debt levels. Furthermore, the quality of the monetary and fiscal policies remains efficient and adequate,” clarified Olena Kolokolova, Rating Analyst of RatingAgentur Expert RA.

“Nevertheless, government debt levels continue to be elevated and exposed to currency risks. In addition, the economy is highly dependent on imports, remittances inflow and main trading partners. Final, the current account remains negative, making the weak external position one of the key factors constraining the rating,” she continued.

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