Friday, September 9 2011 16:48
Armenia's affirmed 'BB-' ratings and stable outlook prove its stability: Finance Minister
ArmInfo. The fact that Fitch Ratings has affirmed Armenia's Long-term foreign and local currency Issuer Default Ratings (IDR) at 'BB-' and has given it Stable Outlook proves that the situation in the country is stable, Armenia's Finance Minister Vache Gabrielyan said during a press-conference on Friday.
He said that Armenia has cooperated with Fitch since 2006 and its rating has not been changed substantially ever since. In 2006 it was 'BB-', then 'BB' and in 2009 again 'BB-' due to the global crisis. "But we have never gone out of the 'BB' category," the Minister said.
He said that Armenia is between Georgia and Azerbaijan: Azerbaijan's rating is 'BBB-', Georgia's one – 'B+'. Georgia shows similar economy growth but the situation in that country is worse due to higher political risks and heavy tax burden. Armenia has lighter tax burden and more controllable foreign debt. Azerbaijan started from 'BB' and went up to 'BBB' in some 10 years due to stably growing oil prices. Armenia failed to rise to 'BBB' because of the crisis but is stably within 'BB'.
According to Fitch, the Armenian authorities are reducing fiscal and external imbalances in line with their IMF- backed economic policy program.
Fitch expects the Armenian Government to reduce the fiscal deficit to 3.9% of GDP in 2011. Withdrawing fiscal stimulus, Armenia narrowed the deficit to 5% of GDP in 2010.
Gabrielyan said that they are targeting further reduction to 3.2% of GDP in 2012.
According to Fitch, Armenia's advantages are the small, well-capitalised financial sector, controllable foreign debt and long-term prospect of low inflation; disadvantages are low per capita GDP, low exports, dependence on foreign money transfers and high current account deficit.
