ARMENIA’S RATING OUTLOOK RAISED TO ‘POSITIVE’ – FITCH

Forbes
May 2 2007

LONDON (Thomson Financial) – Fitch Ratings revised the outlook
on Armenia’s foreign and local currency issuer default ratings
to ‘positive’ from ‘stable’ and affirmed the ratings at ‘BB-‘ on
expectations that economic growth will be sustained on disciplined
macroeconomic policies and structural reforms.

The ratings agency also affirmed the country ceiling at ‘BB’ and the
short-term foreign currency rating at ‘B’.

Armenia’s ratings are supported by an impressive economic performance
with the economy expanding by more than 11 pct each year, since 2000
while annual consumer price inflation has remained below 3 pct. The
ratings and outlook are also supported by a medium-term fiscal policy
framework and prudent budgetary policies, Fitch said.

However, Fitch warned that Armenian policymakers face significant
challenges in sustaining strong and balanced economic growth against
the backdrop of strong upward pressures on the exchange rate, rapid
expansion of private credit and construction activity, while also
anchoring inflation expectations under the recently introduced direct
inflation targeting regime.

In addition, Fitch said upcoming parliamentary elections and
presidential elections in 2008 could potentially complicate
macroeconomic policy management, although it does not expect any
material impact to economic or foreign policy.