ArmInfo. The confirmation of the "Ba3" rating by Moody's is a very powerful message for international investors, as it confirms the stable outlook for economic growth in Armenia, as well as the favorable background of the government's investment policy. RA Minister of Finance Tigran Khachatryan stated this at a government session on September 2.
To note, Moody's Investors Service ("Moody's") has affirmed the Government of Armenia's Ba3 local and foreign currency long-term issuer ratings and foreign currency senior unsecured rating. As Moody's reports on its website, the outlook remains stable. The affirmation of the Ba3 ratings is driven by the credit profile's resilience to the significant shocks of the coronavirus pandemic and geopolitical and domestic political tensions, and Moody's expectations that growth and fiscal strength will recover over the medium term. The fiscal profile in particular has proven resilient and will stabilize over the medium term, with debt consolidation expected from 2021 onward as growth and revenue rebound, and as the government adjusts expenditure downward in line with fiscal rules. Meanwhile, Moody's assesses that the 2020 ceasefire agreement with Azerbaijan and the June snap parliamentary election have reduced near-term political risks, supporting economic recovery and minimizing the impact to Armenia's fundamental growth outlook.
The Minister of Finance recalled that the previous time Moody's made an assessment in 2019. After that, in 2020, due to the pandemic and the war, Armenia faced significant economic risks. "This assessment of Moody's indicates an increase in the level of Armenia's resistance to such risks, and also emphasizes the effectiveness of the republic's economic policy from this point of view," he explained. According to Khachatryan, Moody's Investors Service also touched upon the state debt of Armenia. Thus, according to the publication, despite the fact that at the end of 2020 the ratio of government debt to GDP increased to 63.5% (the law allows for an increase of up to 60%, Ed. note) Moody's notes the importance of government policy to reduce the rate below 60% of GDP.
"Moody's believes that reforms aimed at increasing the competitiveness of the Armenian economy and the level of management of state institutions, improving the current account deficit, including through FDI, as well as improving relations with neighboring countries", said the head of the Armenian Ministry of Finance.
