MOODY’S LEAVES UNCHANGED BA2 RATING OF RISKS RELATED TO FULFILMENT OF LIABILITIES BY ARMENIAN GOVERNMENT

Noyan Tapan
Dec 6, 2007

YEREVAN, DECEMBER 6, NOYAN TAPAN. Moody’s Investor Service
international rating company has again assigned Armenia Ba2 rating
of risks related to fulfilment of liabilities in the national drams
and foreign currency by the Armenian government, Tigran Jrbashian,
the Armenian director of the Armenian-European Policy and Legal Advice
Centre (AEPLAC), stated at the December 6 press conference. He reminded
that it is the second year that Armenia is among nearly 100 countries
that receive Moody’s rating. The latest rating results regarding
these countries were published in November 2007.

According to the director of the AEPLAC, assignement of Ba2 rating
shows that the level of the overall debts of the Armenian government
and economic entities is low when Armenia’s credit risks are compared
with credit risks of other countries. On the other hand, this rating
bears evidence of the low level of institutional development of the
Armenian economy.

Moody’s has also assigned Armenia a higher – Baa3 rating of the
country’s overall credit risks. This rating shows the level of risks
related to repayment of debts by organizations of Armenia’s state
and private sectors.

In the opinion of experts of Moody’s, the decline of the foreign
debt indices as compared with the indices of the Armenian economy’s
development in recent years was due to the rise in prices of raw
materials in international market and the growth of private remittances
from abroad.

Under conditions of an expected slump in the world economy, the prices
of raw materials will fall, which is risky for the Armenian economy. On
the other hand, Russia is the main source of remittances sent to
Armenia, and its economy is based on the export of hydrocarbonic
raw materials. A fall in their prices may result in a decline of
employees’ incomes in Russia and remittances to Armenia. At the same
time, experts of Moody’s said that the fall in raw material prices
may have a positive impact on the economy of Armenia as a country
importing these goods.

T. Jrbashian said that experts of Moody’s expressed an opinion that
the fact that Swedish-Finnish OMX AB compnay will become the owner of
the Armenian Stock Exchange and the Central Depository will create
favorable conditions for attracting resources from international
financial markets. These experts registered a growth of productivity
in the Armenian economy.