S&P Global Ratings has affirmed Armenia’s ‘BB-’ long-term and ‘B’ short-term sovereign credit ratings in both foreign and local currencies, while maintaining a positive outlook on the long-term ratings.
According to S&P’s assessment published on August 21, the positive outlook reflects the potential for Armenia to build a stronger track record of external resilience through continued accumulation of foreign currency reserves and further progress toward normalizing relations with Azerbaijan. Such developments could gradually reduce the country’s balance-of-payments and geopolitical vulnerabilities.
S&P said the ratings remain constrained by Armenia’s exposure to material, although moderating, geopolitical and external security risks, evolving institutional settings, moderate income levels and balance-of-payments vulnerabilities. At the same time, the ratings are supported by prudent policy frameworks, strong growth prospects and a moderating government debt burden.
S&P said the June 7 parliamentary election, in which Prime Minister Nikol Pashinyan’s Civil Contract party won about 50% of the vote and retained a parliamentary majority, should reinforce policy continuity.
The rating agency expects the government to continue implementing its reform agenda, including structural reforms, fiscal consolidation and closer engagement with Western partners. It also expects efforts to improve the business environment and expand trade and investment links with the European Union.
The election outcome could also provide fresh momentum for the normalization of Armenia-Azerbaijan relations and progress toward signing and implementing the peace agreement, S&P said.
However, the agency noted that the process remains uncertain, with issues including border demarcation and security arrangements still unresolved. Armenia’s constitutional reform process could also remain a source of domestic uncertainty, particularly following the loss of Civil Contract’s constitutional majority.
S&P also highlighted the potential of the proposed Trump Route for International Peace and Prosperity (TRIPP) to strengthen regional connectivity and support trade and investment. However, implementation remains at an early stage, with project areas, financing and detailed concession terms yet to be finalized.
