Armenia's rating outlook raised to 'positive' - Fitch

05.02.07
Forbes

LONDON (Thomson Financial) - Fitch Ratings revised the outlook on Armenia's foreign and local currency issuer default ratings to 'positive' from 'stable' and affirmed the ratings at 'BB-' on expectations that economic growth will be sustained on disciplined macroeconomic policies and structural reforms.

The ratings agency also affirmed the country ceiling at 'BB' and the short-term foreign currency rating at 'B'.

Armenia's ratings are supported by an impressive economic performance with the economy expanding by more than 11 pct each year, since 2000 while annual consumer price inflation has remained below 3 pct. The ratings and outlook are also supported by a medium-term fiscal policy framework and prudent budgetary policies, Fitch said.

However, Fitch warned that Armenian policymakers face significant challenges in sustaining strong and balanced economic growth against the backdrop of strong upward pressures on the exchange rate, rapid expansion of private credit and construction activity, while also anchoring inflation expectations under the recently introduced direct inflation targeting regime.

In addition, Fitch said upcoming parliamentary elections and presidential elections in 2008 could potentially complicate macroeconomic policy management, although it does not expect any material impact to economic or foreign policy.

TFN.newsdesk@thomson.com

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