ARMENIA’S POLITICAL TURMOIL COULD THREATEN ITS POSITIVE RATING OUTLOOK – FITCH

Forbes
March 4 2008
NY

MUMBAI (Thomson Financial) – Fitch Ratings said the recent
political turmoil in Armenia could threaten the positive outlook
on the sovereign’s long-term issuer default ratings (IDR) of ‘BB-‘,
if unrest were to persist or intensify.

‘The political unrest witnessed in Armenia over the past fortnight
need not de-rail the country’s improving economic fundamentals,’
said Andrew Colquhoun, director in Fitch’s Sovereigns group.

‘However, if the situation were to escalate or persist then it could
risk damaging domestic and international confidence, and undermining
the authorities’ focus on sound economic policy management,’
Colquhoun added.

Incumbent prime minister Serzh Sarkisian won a presidential election
on Feb 19 with 53 pct votes, against 22 pct for second-placed Levon
Ter-Petrosian. International observers broadly endorsed the vote, while
noting some shortcomings. This sparked protests by Ter-Petrosian’s
supporters, which were later quelled by security forces.

Armenia’s constitutional court is set to rule on complaints against
the handling of the elections in the next few days and if the court
upholds the results, adding to the qualified endorsement of the
international community, there is a risk the opposition could resort
to extra-legal action, Fitch noted.

An escalation of violence would be strongly negative for Armenia’s
basic political stability and sovereign ratings, it said.