YEREVAN, July 29. /ARKA/. The international rating agency Moody’s Ratings has revised the outlook on Armenia’s sovereign rating from stable to positive, affirming its long-term issuer ratings in both local and foreign currencies at Ba3.
According to the agency’s report, the improved outlook reflects reduced political risks, including a reduced likelihood of renewed large-scale hostilities with Azerbaijan, diversified external ties, and muted domestic political risks. Moody’s Ratings also notes the increased likelihood that strengthening economic growth prospects will lead to improved fundamentals in Armenia.
“The affirmation of the Ba3 rating reflects Armenia’s high growth potential and comparatively strong institutions and governance. These factors, however, are offset by rising interest expenses and persistent geopolitical risks,” the authors of the study note.
According to Moody’s, uncertainty surrounding Armenia’s foreign policy reorientation and relations with Russia continues to pose risks to the country’s economic security, given the close ties between the two countries.
It is noted that Armenia’s country rating ceilings have been maintained at Baa2 in local currency and Ba1 in foreign currency. The agency explained that the gap between these ceilings and the sovereign rating reflects a combination of relatively strong institutions and the state’s small role in the economy, geopolitical risks, a current account deficit, and capital transfer and conversion risks in stressed conditions.
