Fitch Ratings rating agency reaffirmed The Long-Term Issuer Default Ratings (IDRs) of Armenia in long-term foreign currency and national currency are at the “BB-” level, maintaining the positive outlook (Positive Outlook). At the end of the analysis, a complete list of ranking actions is also presented.

The positive forecast reflects the growth of Armenia’s international reserves, the continued stable economic growth, which will contribute to the stabilization of the public debt in the medium term, as well as the prospects for the improvement of long-term geopolitical risks.

The framework of peace formed under the auspices of the USA with Azerbaijan has significantly reduced the risks of escalation of military tension in the near future. However, there is still uncertainty regarding the successful conclusion of the peace process, including in the context of a possible constitutional referendum.

It is also noted that the growing diplomatic tension with Russia continues to create risks for Armenia’s economy, especially considering the country’s significant dependence on Russian energy imports.

Economical of growth stable In the outlook section, Fitch notes:

Armenia’s economy grew by 7.1% in 2025, continuing the high economic growth trend of the previous few years. Fitch Ratings forecasts that real GDP growth will slow to 5.2% in 2026, but it will continue to significantly exceed the BB-rated average of 2.9%.

The relatively low dependence of Armenia’s economy on oil limits the possible impact of the war in Iran on the country’s economy. At the same time, the economic consequences of the import restrictions imposed by Russia still remain uncertain.

In order to mitigate possible negative impacts, the Armenian government and the European Union provide exporters with financial support and tariff preferences.

By the way, according to Fitch, the IT sector and the start of operation of the Amulsar gold mine will contribute to Armenia’s economic growth.

“We prediction we are, that medium term in perspective economic growth will stabilize around 5% level, how many that offer on the side last years recorded shocks effect gradually will decrease. At the same time time, to growth will continue to contribute dynamic developing informative and: of communication technologies the field and: Amulsari of gold mine operation start”։

It is also noted that a number of large-scale infrastructural investment programs can provide an additional impetus to economic growth in the long term. Among them is the “Trump Road for International Peace and Prosperity” initiative, a corridor that, crossing Armenia, will connect Azerbaijan to the autonomous republic of Nakhichevan, and then to Turkey.

The plans for the creation of a new artificial intelligence data center have been expanded, and the volume of investments may reach 12% of Armenia’s GDP.

Consistent implementation of the peace agreement and the reopening of the border with Turkey could further boost economic growth through increased investment, exports and employment.

Fitch-expects that 2026 in the year inflation on average will make 4.4%, then gradually return of Armenia central bank 3% target level։

“The trend of rising inflation was formed even before the start of the Iran war, due to the increase in the costs of food, services and the universal health care system.

At the same time, the import restrictions applied by Russia may lead to an increase in the domestic supply of some products, which will create a disinflationary effect.

We predict that the Central Bank of Armenia (CB) will temporarily raise its main refinancing rate by 25 basis points (0.25 percentage points) to 6.75%.

According to Fitch, despite exceeding the budget indicators, risks remain.

“In 2025, the budget deficit of the general system of public administration was 3.7% of the GDP, which was lower than the indicator provided by the budget, but exceeded the average indicator of 2.8% of the countries with a rating of “BB”.

We forecast the deficit to widen slightly in 2026, in line with the government’s revised budget target.

Current expenditure growth continues to be high, due to the increase in health care costs with the introduction of the universal health care system, as well as the increase in pensions. This impact is partially mitigated by lower defense and security spending.

In the medium term, we forecast that the budget deficit will decrease to 3.4% of GDP by 2028, which will, however, remain above the government’s medium-term deficit target of 2.8% of GDP.”

The Fitch report states that the state the debt mostly will remain stable

“As of the end of 2025, the debt of the general public administration system has decreased, reaching 47.2% of GDP, which is lower than the average indicator of 51.6% of countries with a rating of “BB”.

We expect the public debt-to-GDP ratio to remain broadly stable as higher nominal GDP growth offsets smaller primary budget deficits. At the same time, as a result of exchange rate fluctuations, certain variability in debt indicators is possible.

According to our estimation, financing needs in 2026-2028 will be met mainly through domestic financial sources, as well as bilateral and multilateral lenders.

Strengthening of foreign reserves in conditions of weakening of the external position

The current account deficit has grown to 7.2% of GDP in 2025, up from 4.6% last year, more than twice the average for countries with a ‘BB’ rating.

This was due to the increase in domestic demand, the restoration of normal levels of transit trade and the decrease in income from tourism.

A part of the financing of the current account deficit is related to investments financed by external bank loans. At the same time, the participation of international financial organizations among the sources of financing contributes to mitigating existing risks.

We forecast that in 2026-2028 the current account deficit will decrease somewhat, but will remain above the indicators of comparable countries.

As of the end of May 2026, Armenia’s international (foreign currency) reserves reached a record 5.9 billion US dollars, which is due to the fact that the Central Bank of Armenia purchased US dollars in the domestic market.

However, due to high demand for imports, the coverage of reserves against current foreign payments will be around 3.6 months until 2028, which is lower than the average of 4.5 months for countries with a rating of “BB”.

Banking: system stability

In the first quarter of 2026, the growth of loans to the private sector remained at a high level, making 21.7% on an annual basis.

Financial stability risks are mitigated by banks’ strong capital and liquidity positions. Even in the conditions of the decrease of extraordinary financial flows from Russia, the profitability of the banking system remains high, which creates an additional protective buffer to withstand possible economic shocks.

The level of dollarization of deposits continues to decrease and reached 42.4% as of May. This was facilitated by the regulatory measures, the increase in confidence in the Armenian dram and the appreciation of the national currency.

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