MOODY ASSIGNS ARMENIA Ba2 RATING

Armenpress

YEREVAN, JULY 25, ARMENPRESS: The governor of the Central Bank of
Armenia, Tigran Sarkisian, said today the Moody’s Investors Service
had assigned on Monday a Ba2 foreign and domestic currency ratings
to the government of Armenia.

He said Moody made its decision based on continued GDP growth rates
of around 10% per annum or above since 2001, the subdued inflationary
pressure due to the appreciation of the national currency dram and
to a cautious monetary and fiscal policy stance.

Sarkisian said the rating was given in light of the progress made by
the country since 1995, the year that marked the end of the seven-year
contraction that followed the collapse of the Soviet Union.

"We believe that over the medium term, there is sufficient scope
for further GDP growth such that it will help alleviate poverty
and reduce unemployment, both of which remain high in Armenia,"
Moody’s Vice President Sara Bertin was quoted as saying in a press
release. "Moreover, the rating is supported by the limited level and
favorable maturity structure of Armenia’s foreign-currency denominated
debt," she said.

She said that with a 23% debt-to GDP ratio at the end of 2005, the
country compares well to its peers.

Ninety percent of the debt is owed to multilateral lenders on
concessional terms representing a long maturity and associated minimal
debt-servicing cost.

"We have also taken note of the high level of dollarization and the
country’s lack of financial depth," said Bertin.

"Moody’s assigns a very low probability that the conflict between
Azeris and Armenians might resume over the short to medium term,"
said Bertin. "As long as a credible and sustainable solution has yet
to be found to the conflict, uncertainties remain over the countries
of the South Caucasus. Due to their borders with Iran, countries such
as Armenia and Azerbaijan are potential strategic partners for the
United States, Russia and Iran," she said.

Tigran Sarkisian said this rating allows Armenia to have its own place
in the international financial markets and gives foreign companies and
private businessmen to have a clear idea of Armenia and its economy
and is essential in their deciding whether to invest here or not.

The governor said five local commercial banks have already asked the
Moody’s for their, possibly higher individual l ratings.