Fitch Ratings has affirmed Armenia's Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'B+' with Stable Outlook.

The issue ratings on Armenia's senior unsecured Long-Term Foreign Currency bonds have also been affirmed at 'B+'. The Country Ceiling has been affirmed at 'BB-' and the Short-Term Foreign Currency and Local Currency IDRs at 'B'. 

Fitch does not expect material changes in the direction of economic policy after Armenia’s parliamentary elections in 2017.

According to Fitch, the ratings are weighed down by high net external debt, high fiscal deficits leading to a rising debt burden, a highly dollarised banking sector and tensions with some neighbouring countries.

Growth has weakened, as Fitch estimates 0.8% growth in 2016 reflecting weak domestic demand, partly as a result of lower remittances inflows. Growth will increase gradually in 2017 and 2018, reaching 2.1% and 3.1%, respectively, driven by the expected recovery in the Russian economy and moderate recovery in commodity prices. Fiscal consolidation in 2017 creates risks for Armenia's recovery path.

 Fitch estimates Armenia's public debt reached 56.8% of GDP in 2016, similar to the 'B' category median.