In its latest assessment, Fitch Ratings affirmed Armenia’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘BB-’ with a Stable Outlook, recognizing the country’s solid macroeconomic foundations and continued growth momentum, while also cautioning about growing fiscal and geopolitical risks.

Armenia’s credit profile is supported by a sound macroeconomic policy framework—such as inflation targeting and prudent public finance management—which has helped maintain financial stability amid regional turmoil. Real GDP expanded by an average 8.9 percent from 2022 to 2024, driven in part by increased trade with Russia and an influx of migrants and capital following the Nagorno-Karabakh conflict.

Fitch notes that this growth is likely to moderate. It projects GDP growth of 5 percent in 2025 and 4.7 percent in 2026–27, with potential support from the Amulsar gold mine, expected to come online in late 2025.

However, fiscal weaknesses have increased. Following the 2020 war and displacement, government spending has risen—particularly in defense and refugee support—pushing the fiscal deficit to 5.4 percent of GDP in 2025, before it moderates in later years. Additionally, a universal health insurance rollout could increase spending by 0.8 percent of GDP annually in the medium term. Fitch considers the goal of reducing the deficit to 1 percent by 2030 ambitious amid these pressures.

Gross general government debt is projected to rise from 48 percent of GDP in 2024 to 51.3 percent in 2025, and up to 54.2 percent by 2027. Although consistent with ‘BB’ rating levels, the debt structure—with half in foreign currency—leaves Armenia vulnerable to currency fluctuations. Still, nearly 80 percent of its external debt is owed to multilateral lenders like the IMF and World Bank, offering more favorable terms.

To strengthen reserves and ease domestic debt pressure, Armenia issued a $750 million Eurobond in March 2025, much of which was used for refinancing and reserve topping-up. Fitch does not expect further Eurobond issuance in 2025–26, as the government aims for debt stabilization.

Despite stronger diplomacy—including normalization efforts with Azerbaijan and Türkiye—Fitch warns that geopolitical tensions in the region continue to pose uncertainty for Armenia’s outlook.