Fitch Ratings has assigned Armenian capital city of Yerevan Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) of “B+” and a Short-Term Foreign Currency IDR of “B”.
The Outlooks on the Long-Term IDRs are Stable. The ratings reflect Yerevan’s status as Armenia’s capital, satisfactory budgetary performance, supported by steady transfers from the central government, and a debt-free status.
In its base case scenario, Fitch expects the city to maintain satisfactory fiscal performance with an operating margin of 2-3% in 2016-2018 (2011-2015: average 7.5%). The lower than historical margins will be driven by continued adjustment of the city’s operating revenue to negative shocks resulting from the protracted slowdown of Armenia’s economy in 2014-2015.
“We also expect Yerevan to run a slight surplus before debt variation of 1-2% of total revenue in 2016-2018, after an average deficit of 1% in 2011-2015. Fitch projects Yerevan city’s operating revenue will total AMD 78 billion in 2016, up by 3% YoY”, the statement said. “Capital spending is likely to decrease slightly to about AMD 7-8 billion in 2016-2017 (2015: AMD 9 billion) before rising to about AMD 10 billion in 2018. It will likely remain at below 10% of total expenditure, significantly below the average of 22% in 2011-2015, when the city made material infrastructure investment funded by state transfers and donor grants”. (PanArmenian/Business World Magazine)
