Fitch Ratings had considered Armenia and Georgia as among the sovereigns most vulnerable to the spillover from Russia’s invasion of Ukraine, but so far, the macro impact has been positive. This reflects the inflow of skilled nationals from the war-affected countries. Up to 90,000 Russian, Belarussian and Ukrainian nationals have entered Georgia since the invasion of Ukraine. The number of visitors to Armenia nearly doubled to 130,000 in June, from February levels, although a breakdown by nationality is not available. Surge in Money Transfers: Money transfers from Russia to these countries have surged. Russian money transfers into Georgia rose by 306% yoy in 1H22. In Armenia, money transfers through banks nearly doubled in the same period (although data by country of origin are not yet available). Boost to External Positions: The large secondary and primary income flows (as Russians relocate but continue to work for their Russia-based employers), combined with ongoing tourism recoveries and higher prices for export commodities, are narrowing current account deficits in both countries and strengthening FX reserves. The inflows have prevented the rise in dollarisation that can occur in both at times of shocks, and have strengthened exchange rates. The latter is supportive for government debt given the high weight of FX-denominated debt in total debt.