YEREVAN, July 31. /ARKA/. Fitch ratings said in a report that Armenia’s government debt/GDP fell sharply to 46.7% in 2022 from 60.2% in 2021 due mainly to currency appreciation, but also due to the  strong nominal GDP rebound and fiscal consolidation.

On July 28 Fitch Ratings upgraded Armenia's Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'BB-' from 'B+'. The Outlook is Stable.

Fitch expects stabilization at around 44.6% in 2023-25, below its pre-pandemic 2019 level of 53.7% and the current 'BB' median of 54.1%.

The share of FX-denominated debt of 60.5% as of 1Q23 is above the 'BB' median of 55%, although this has declined from 71.2% at end-2021 due to sharp dram appreciation as well a shift to greater local borrowing.

Risks to debt dynamics are mitigated by the relatively large share of concessional debt, and the high proportion of fixed rate debt (84.1% as of May).

Fitch expects that robust nominal economic growth and higher spending will result in a moderate increase in the general government deficit (cash basis) to 2.5% of GDP, from 2.2% in 2022. Fitch's forecast is more optimistic than the government's expectation of a deficit of 2.9%, given the agency's higher growth projection, and slightly more conservative view of capex execution. Fitch expects the deficit to widen to an average of 3% of GDP in 2024-25. -0-