Fitch expects Armenia not to use $121 million available under IMF agreement

YEREVAN, January 29. /ARKA/. /. Fitch expects that authorities will not draw down the USD121 million available under the IMF Stand-By Arrangement (expiring this year), and will treat it as a precautionary buffer. Net external debt will be about 2x the projected 'BB' median, averaging 26.8% of GDP in 2025-2026.

In December 2024, the IMF opened access for Armenia to about $24.1 million (18.4 million SDRs) under the Stand-By Arrangement (SBA), bringing total access to about $120.59 million (92 million SDRs).

Fitch's research notes that external finances are a weakness in Armenia's rating, given its history of large current account deficits and high net external debt relative to rated countries.

“The current account deficit amounted to 4.2% of GDP in the first-third quarter of 2024. The large flow of gold re-exports ($4.9 billion, equivalent to 47% of total Armenian exports) from Russia to the United Arab Emirates slowed significantly in the first-third quarters of 2024 and is unlikely to reach previous levels.

Fitch expects the current account deficit to average 4.3% of GDP in 2025-2026, which will be characterized by persistently large deficits in goods and surpluses in services,” the agency's analysts write.

It is also noted that coverage of international reserves fell to 2 months of current external payments in 2024, although this was distorted by a large increase in re-exported gold imports. Excluding this, coverage amounted to 2.7 months of current external payments, and Fitch expects it to average 3.2 months in 2025-2026.

The report also indicates that net external debt will be about 2x the projected median 'BB', averaging 26.8% of GDP in 2025-2026.