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Police reinforce its positions at Khoreatsi Street

Policemen's actions against Daredevils of Sasoun escalate situation even more

Armenian NSS warns that it has to take stricter actions for preventing new crimes by Daredevils of Sasoun

VTB Bank (Armenia) resumes service of transfers from card to card via Visa Direct system

Ombudsman presented his position and proposals related to events in Erebuni

View from Berlin: Establishment of Turkish bases in Azerbaijan testifies to Turkey's independent geopolitical game in Eurasia

Armenia's Police urge demonstrators to find another place to hold protests

German political analyst says Western forces may be behind orange revolutions and coup attempts in post- Soviet countries

Forecast: Eradication of ISIL and other organizations in Afghanistan, Iraq and Libya will result in spillover of war to Southern Europe, France and Germany

German political analyst: New gold war emerged, as Russia refused to accept Western model of development

Armenian Police: "Daredevils of Sasoun" have been provided with food

Alliance Party officially joins people's movement in support of "Daredevils of Sasoun" and their demands to Armenia's leadership

"Daredevils of Sasoun" group disclaims Police reports: Skirmish occurred in area of seized building not on neutral territory

Deputy Minister of Economy does not specify final date of Armenia-EU new framework agreement

Tigran Balayan: Armenia's leadership has repeatedly commented on normalization of relations with Turkey

Wounded members of "Daredevils of Sasoun" undergo surgery

Armenian Police make statement on past night's skirmish

Armenian Police: Armed group that seized Police Patrol Service Regiment has burnt three police cars in territory of seized building

Two members of armed group "Daredevils of Sasoun" wounded overnight and taken to hospital

Rebels burn two police cars on territory of seized building

Newspaper: Zhirayr Sefilyan does not refuse from the demand of Serzh Sargsyan's resignation

Oppositionists at Khorenatsi Street demand from Armenian authorities to refute information that armed groups from Chechen Republic are arrivING in the country

In H1, Anelik Bank registered growth of incoming money transfers by 26% y-o-y amid growth of outgoing transfers by 41% y-o-y

Charges pressed against three citizens for using violence against policemen in Yerevan

Founding Parliament: Helicopters of the 102nd Russian military base are on the way to Yerevan

National Security Service of Armenia reports new detentions and exposure of criminal group tied with "Daredevils of Sasoun"

Charges pressed against six citizens, another six citizens detained related to mass disorders in Yerevan

Delegation of Armenian Armed Forces General Staff travels to Minsk

National Security Service of Armenia calls on "Daredevils of Sasoun" to display their reasonableness, put down arms and surrender

Forecast: Precedent of "Daredevils of Sasoun" may spark more attempts of radical steps against authorities

Oppositionist says major topic of possible Sefilyan-Sargsyan meeting will be peaceful resolution of standoff rather than resignation of president

Members of opposition group threaten with civil disobedience throughout Armenia

Viva-Cell MTS offers roaming in Europe at special tariffs

TUMO Center for Creative Technologies to open in Koghb, near border village in Tavush region

Vitaly Balasanyan assures: President will invite Jirayr Sefilyan for a talk, after "Daredevils of Sasoun" put down arms and surrender

Democratic Party of Armenia comes out from political position, as standoff continues in Yerevan

Azerbaijan keeps violating ceasefire on Karabakh-Azerbaijan Line of Contact

Night at seized police patrol service station passed without incidents: Standoff in Yerevan enters day 8

"Daredevils of Sasoun" burn police car

Mass media: Activist Ani Navasardyan detained on charge of provoking mass unrest

Serviceman of NKR Defense Army killed from adversary's shot

Group of journalists arrives at seized building of the Police Patrol Service Regiment

Investigative Committee: Charges pressed against three citizens of Armenia for participation in mass disorders

"Sasna Tsrer" released the rest two hostages -Osipyan and Yeghiazaryan

Russian Foreign Ministry criticized EU's statement on events in Yerevan

Major General Vitaly Balasanyan provides details of his meeting with "Daredevils of Sasoun"

Armenian Foreign Ministry verifying if there were citizens of Armenia among Munich shooting casualties

National Security of Armenia confirms: Members of armed group voluntarily release two of four hostages

National Security Service of Armenia says two persons tied to armed group detained

Nikol Pashinyan: Levon Ter-Petrosyan and Serzh Sargsyan plot yielding territories around Nagorno Karabakh to Azerbaijan

Regional

Fitch affirms Armenia at 'BB-'; Outlook stable

  • by Karina Melikyan

  • Wednesday, August 6, 02:57

 Fitch Ratings has affirmed Armenia's Long- term foreign and local currency Issuer Default Ratings (IDRs) at 'BB-'. The Outlooks are Stable.  The issue ratings on Armenia's senior unsecured foreign and local currency bonds have also been affirmed at 'BB-'. The Country Ceiling has been affirmed at 'BB' and the Short-term foreign currency IDR at 'B'.

According to Fitch Ratings's website, the affirmation of Armenia's sovereign ratings reflects the following key factors:

The general government deficit fell to 1.7% of GDP in 2013, against initial projections of 2.8%.  This was mainly due to under-execution and delays in the implementation of public investment.  The government expects the deficit to rise to 2.4% of GDP in 2014, although further under- execution is possible. The increase in public sector wages, effective from 1 July 2014, will increase public spending by about 0.4% of GDP in 2014 and 2015, but has already been budgeted for and will be compensated by an increase in tax collection.

The general government debt level is expected to remain stable at around 43%-44% of GDP in 2014-15, and could fall in 2016 if GDP growth picks up. However, with about 85% of public debt foreign-currency denominated, Armenia's debt profile is vulnerable to exchange rate shocks.  The administration's willingness to prioritise domestic financing will lead to a gradual pick-up in domestic issuance, where appetite for state bonds will be boosted by insurance and pension reforms. 

GDP growth slowed in 1H14, partly because of the slowdown of the Russian economy, but is expected to pick-up slightly in the second half to average about 4.5% for the year, mainly as a result of base effects and a pick-up in investment. Although the increase in public sector wages may have a positive impact on private consumption, the recurring under-spending of public investment will continue to act as a drag on domestic demand. Inflation is expected to remain close to the Central Bank's target of 4%.

Because of its high dependence on Russia in terms of gas supplies, remittances and military support, Armenia remains particularly vulnerable to developments and policy changes in Russia.  Despite the slowdown in Russia, remittances have held up. Net remittances account for about 15% of GDP, of which more than 80% come from Russia. Similarly, nearly 20% of Armenian exports are destined for Russia. The Armenian government has announced its intention to finalise negotiations for its accession to the Eurasian Economic Union, but diplomatic hurdles remain. 

The current account deficit (CAD) shrank slightly in 2013, but is expected to remain high at nearly 10% of GDP in 2014, partly because of the weak performance of the Russian economy.  The Central Bank of Armenia is allowing some exchange rate flexibility, but international reserves fell in 1H14, following pressure on the exchange rate and the still large CAD. Reserves are likely to decline slightly over the coming years. 

Armenia has benefited from a series of IMF programmes and has agreed a further USD128m extended fund facility for 2014-17, which will act as a policy anchor. Armenia has so far fulfilled most of the performance criteria. Armenia will continue to enjoy support from major international financial institutions, which have been instrumental in most large infrastructure projects. 

Armenia's geopolitical environment is a constraint on the rating. The latent conflict with Azerbaijan over the disputed Nagorno-Karabakh region entails the risk of escalating into a full- scale conflict. 
The Stable Outlook reflects Fitch's assessment that upside and downside risks to the ratings are currently well balanced. Consequently, Fitch's sensitivity analysis does not currently anticipate developments with a high likelihood of leading to a rating change. The main factors that, individually or collectively, could lead to positive rating action are:

-Further improvement in the CAD and a stronger reserve position.
-A substantial decline in the debt-to-GDP ratio would improve creditworthiness, especially given the strategy of relying more on relatively costly domestic issuance and the vulnerability of debt dynamics to external shocks, via the exchange rate.
-An easing of the tensions with Azerbaijan or an improvement in relations with other neighbouring countries.
The main factors that, individually or collectively, could lead to negative rating action are:
- A bigger than expected impact on GDP growth from economic and political developments in Russia.
- A sharp rise in net external debt and a weakening of reserves.
- Material slippage in the performance of public finances leading to a significant rise in the debt/GDP ratio.
The key assumptions are as follows:

The ratings and Outlooks are sensitive to a number of assumptions:

Fitch assumes continuation of good relations with Russia, given the importance of this relationship both economically and diplomatically.
Fitch assumes that a sharp downswing in metals prices is avoided. Mining exports, especially copper, account for about half of Armenia's goods exports.
Fitch assumes that Armenia continues to enjoy broad social and political stability, and that there is no significant worsening in tensions with Azerbaijan surrounding Nagorno-Karabakh.
Fitch assumes that the global economy performs broadly in line with Fitch's Global Economic Outlook and that the US Federal Reserve exit from monetary stimulus is orderly, so that Armenia retains external market access despite higher international financial volatility.

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