Fitch Ratings has affirmed Armenia's Long-term foreign and local currency Issuer Default Ratings (IDRs) at 'BB-'.

The issue ratings on Armenia's senior unsecured foreign and local currency bonds are also affirmed at 'BB-'. The Outlooks on the Long-term IDRs are Stable, Fitch said in a statement. 

The affirmation of Armenia's sovereign ratings reflects the following key factors: - Fiscal outturns came in below budget for the second consecutive year in 2013. Due to higher-than-expected tax revenue and under-spending on large foreign-financed projects, Fitch estimates that the fiscal deficit remained virtually unchanged from 2012 at about 1.6% of GDP in 2013, compared with a projected 2.6% in the budget law.

A narrowing of the CAD, together with Armenia's first sovereign eurobond issue, helped to generate a modest increase in foreign currency reserves.

The key assumptions say there is no material shift in Russia's policy towards Armenia.

Besides, Fitch assumes that Armenia continues to enjoy broad social and political stability, and that there is no significant worsening in tensions with Azerbaijan surrounding Nagorno-Karabakh

Fitch also assumes the gradual progress in deepening fiscal and financial integration at the eurozone level will continue; key macroeconomic imbalances within the currency union will be slowly unwound; and eurozone governments will tighten fiscal policy over the medium term.