Standard & Poor’s credit rating agency has upgraded Armenia’s ranking from ‘BB-‘ From ‘B+’ ‘ and affirmed its short-term foreign and local currency sovereign credit ratings at ‘B’. The outlook is stable.
The stable outlook balances Armenia’s strong economic growth prospects and improved fiscal balance sheet against its moderately weak external position and elevated geopolitical risks.
According to the agency, the upgrade reflects the improvements in Armenia’s GDP per capita and fiscal performance. The country’s close geographic, economic, and cultural ties with Russia have positioned it as one of the preferred destinations for Russian individuals and businesses seeking refuge from their home country’s economic and political stresses. As a result, migrant and capital inflows have propelled economic growth, with real GDP in Armenia increasing by 12.6% in 2022, and have narrowed Armenia’s persistent fiscal and current account deficits,” S&P says.
Financial inflows also resulted in a 22% appreciation of the Armenian dram against the U.S. dollar in 2022. This substantial currency appreciation has helped to shrink the government debt stock in U.S. dollar terms.