Tweet
Financial Mirror, Cyprus
Dec 1 2007
Moody's maintains stable outlook on Armenia, despite country
weaknesses
01/12/2007
In its annual report on Armenia, Moody's Investors Service said its
Ba2 rating for local and foreign currency debt obligations and stable
outlook balances the low debt burden of the government and economy as
a whole against the country's weak institutional capacity and modest
level of economic development.
The government bond ratings and Moody's assessment of a low risk of a
payments moratorium in the event of a government bond default serve
as the basis of Armenia's Baa3 foreign currency country ceiling for
bonds.
"While Armenia's debt burden compares well with similarly rated
countries, as a relatively poor nation in the process of
transitioning to a market-based economy, Armenia's institutions are
still relatively undeveloped," said Moody's Assistant Vice President
Joan Feldbaum-Vidra, author of the report.
She said Armenia's general government debt burden -- at about 17% of
GDP and falling -- compares favorably with other Ba2-rated countries.
The terms of its debt are also very comfortable relative to its
peers, with 90% of the total owed to multilaterals and having been
procured on concessional terms.
"Another reflection of Armenia's nascent institutional maturity is
the modest revenue take of the government, which is among the lowest
of all CIS countries with taxes to GDP of only 15%," said
Feldbaum-Vidra. "The government is committed to raising this ratio to
help reduce poverty by improving tax collection and broadening the
revenue base."
She said Armenia's large expatriate community provides an important
boost to growth and liquidity. Increased business and consumer
confidence domestically plus robust conditions in Russia, the
principal source for remittances from the estimated
eight-million-strong Armenian Diaspora, have attracted substantially
more foreign exchange inflows.
"Double-digit growth continues, at one of the fastest rates
registered in the world, reflecting the economy's small size," said
Feldbaum-Vidra.
"The government's fiscal and monetary policies are prudent."
Still, she said, links between Armenia's political class and the
business elite foster entrenched vested interests, while the level of
financial intermediation remains low. There are also geopolitical
uncertainties linked to the conflict in the Nagorno-Karabakh region.
Dec 1 2007
Moody's maintains stable outlook on Armenia, despite country
weaknesses
01/12/2007
In its annual report on Armenia, Moody's Investors Service said its
Ba2 rating for local and foreign currency debt obligations and stable
outlook balances the low debt burden of the government and economy as
a whole against the country's weak institutional capacity and modest
level of economic development.
The government bond ratings and Moody's assessment of a low risk of a
payments moratorium in the event of a government bond default serve
as the basis of Armenia's Baa3 foreign currency country ceiling for
bonds.
"While Armenia's debt burden compares well with similarly rated
countries, as a relatively poor nation in the process of
transitioning to a market-based economy, Armenia's institutions are
still relatively undeveloped," said Moody's Assistant Vice President
Joan Feldbaum-Vidra, author of the report.
She said Armenia's general government debt burden -- at about 17% of
GDP and falling -- compares favorably with other Ba2-rated countries.
The terms of its debt are also very comfortable relative to its
peers, with 90% of the total owed to multilaterals and having been
procured on concessional terms.
"Another reflection of Armenia's nascent institutional maturity is
the modest revenue take of the government, which is among the lowest
of all CIS countries with taxes to GDP of only 15%," said
Feldbaum-Vidra. "The government is committed to raising this ratio to
help reduce poverty by improving tax collection and broadening the
revenue base."
She said Armenia's large expatriate community provides an important
boost to growth and liquidity. Increased business and consumer
confidence domestically plus robust conditions in Russia, the
principal source for remittances from the estimated
eight-million-strong Armenian Diaspora, have attracted substantially
more foreign exchange inflows.
"Double-digit growth continues, at one of the fastest rates
registered in the world, reflecting the economy's small size," said
Feldbaum-Vidra.
"The government's fiscal and monetary policies are prudent."
Still, she said, links between Armenia's political class and the
business elite foster entrenched vested interests, while the level of
financial intermediation remains low. There are also geopolitical
uncertainties linked to the conflict in the Nagorno-Karabakh region.