International credit rating Moody’s Investor Service agency has lowered the rating of Armenia’s issuers and state bonds from Ba3 to B1. As a main reason for the change, it is mentioned the growth of Armenia’s foreign vulnerability driven by the reduction of remittances from Russia, the uncertain prospect for foreign direct investments, the increase of super-sensitivity to the changes of exchange rate and the expected pressure on the foreign exchange reserves. The Agency emphasizes that the geopolitical situation also creates additional risks for economic the growth of Armenia, in particular due to the Nagorno-Karabakh conflict.
In an interview with Aravot.am, economist Vilen Khachatryan said that the organizations see some risks for Armenia and this risky situation makes the rating downgrade, “The problem is that the latter see some risk in Armenia’s economic developments, therefore they have reviewed the rating. The trends in reduction of the economic growth can be due to the commercial relations: reduction in volume of imports, the reduction in transfers may be taken into account.” He noted that geopolitically, there are some risky developments in Russia-Turkey relations; there is a threat coming from the Arab world; there are many cases of tense situation on the border; these phenomena are also expressed indicators for those who are rating based on geopolitical position, “Naturally, we have appeared in a region where there are risky developments and these risky developments are also due to our neighboring countries, also Turkey in this case. Therefore, only this factor suffices that to some extent, compared to the ratings of the previous years or previous periods, the geopolitical factor has been increased. I do not think it will have a significant impact on us at the moment.”
Vigen Khachatryan considers that the investment situation of Armenia is not favorable in some extent, a drop in investments is observed and it is also driven by the foreign investments, “Foreign investments are reduced around the world in 2015, and are continued in 2016. Our main investment partner is Russia but as we can see. Russia’s economic situation is not so good in the presence of still low oil prices. Although there are certain positive developments, we can see that the oil prices have begun growing to some extent. If the oil prices have begun growing, we would see some positive developments in our economy.”
Ami CHICHAKYAN
