Moody’s changes Armenia’s ratings from stable to positive

US-based international credit ratings agency Moody’s has upgraded Armenia’s local and foreign currency long-term issuer and foreign currency senior unsecured debt ratings to Ba3 from Ba1, changing the country’s outlook from stable to positive, the Armenian press has reported.

Moody’s decision to upgrade the country’s outlook was driven by the diversification of Armenia’s economic growth drivers, its increasingly stabilised macroeconomic policy and “ongoing measures to strengthen government finances will also likely gradually restore some of the sovereign’s fiscal strength that eroded over 2014-17.”

“Armenia’s economic growth drivers have become increasingly diverse, which contributes to strengthen the economy’s resilience to shocks,” Moody’s analysts said in a statement, noting that they expect the Armenian economy to grow by 5.5-six per cent in the medium term.

The announcement pointed out the increasing importance of the IT sector among the country’s growth sectors. “Further development of this sector is likely to contribute to higher value-added activities and incomes over time, raising Armenia’s economic strength,” the analysts added.

In addition, the ratings agency projects Armenia’s government debt to “decline steadily” from its current moderate levels standing at 51 per cent of its GDP at the end of 2018. The debt burden is expected to remain on a downward trajectory and fall to 45 per cent by 2021-2021.

While the upward change of the new rating would largely depend on “economic competitiveness and institutional credibility”, Moody’s stressed that “a loss of the reform momentum,” an increase in external vulnerability risk and the escalation of the Nagorno-Karabakh conflict could push the rating down.