FITCH CUTS ARMENIA RATING, WARNS OF MAJOR GDP FALL
MSN Indonesia
Agence France-Presse
8/13/2009 1:58 PM GMT
Global credit ratings agency Fitch cut Armenia’s debt rating by one
notch on Thursday and warned the ex-Soviet republic is facing one of
the worst economic contractions worldwide this year.
The agency said in a statement that it had downgraded Armenia’s
long-term foreign and local currency Issuer Default Ratings to "BB-"
from "BB".
It projected that Armenia’s gross domestic product (GDP) would
contract 15 percent this year, "the third-worst outcome expected for
any Fitch-rated sovereign."
Fitch said Armenia’s economy was vulnerable due to its dependence
on external financing and remittances from Russia, which have fallen
sharply amid a severe downturn there.
"The severity of the shock has materially weakened Armenia’s credit
fundamentals and medium-term prospects," Andrew Colquhoun, the director
of Fitch’s Sovereigns Group, said in the statement.
"Unlocking Armenia’s economic potential and restoring strong and
sustained growth necessary to reduce poverty and raise incomes will
be much harder as a result of the crisis," he said.
Ratings agencies such as Fitch assess the capacity of a borrower,
either a state or a company, to repay its debts. A stronger rating
generally enables a borrower to acquire credit on favourable terms.
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