LOWERED RATING BY FITCH FOR ARMENIA SHOULD NOT HAVE A LARGE IMPACT ON THE COUNTRY’S ABILITY TO BORROW

ArmInfo
2009-08-27 20:06:00

ArmInfo. Lowered rating by Fitch for Armenia won’t have a large impact
on Armenia’s ability to borrow, says Nienke Oomes, IMF resident
representative to Armenia, commenting on the recent revision of
Armenia’s Country Ceiling by Fitch from BB+ to BB. "In general I
don’t think it will have a big impact on Armenia’s borrowing ability,
because it is only a minor downgrading and Armenia isn’t very open
yet to international portfolio investment, e.g., foreign investors
typically don’t buy Armenian bonds or stocks. Presently most loans
come to the country from international financial organizations like
the World Bank and the IMF, and bilateral donors like the EU and
Russia. I don’t think the lending decisions of these donors are much
influenced by whether the current Fitch rating is BB+ or BB. Of course
we do care about Armenia’s ability to repay the loan. Subject to the
constraint that Armenia’s debt should remain sustainable, our lending,
and most of the lending by international donors, is mostly motivated
by the needs of the country itself", says N. Oomes.

To remind the reader, by the end of 2008 the ratio of external debt
of Armenia to GDP was 13,2%, compared to 15,7% by the end of 2007. In
March 2009, Armenia signed a 28- month Stand-By agreement with IMF
which totaled $540 mln, and which was augmented at the end of June
to $822,7 mln (533,6 mln SDR).