YEREVAN, August 4. / ARKA /. Fitch Ratings has affirmed Armenia's Long-term foreign and local currency Issuer Default Ratings (IDRs) at 'BB-'. The Outlooks are Stable. The issue ratings on Armenia's senior unsecured foreign and local currency bonds have also been affirmed at 'BB-'. The Country Ceiling has been affirmed at 'BB' and the Short-term foreign currency IDR at 'B'.

KEY RATING DRIVERS

The affirmation of Armenia's sovereign ratings reflects the following key factors: The general government deficit fell to 1.7% of GDP in 2013, against initial projections of 2.8%. This was mainly due to under-execution and delays in the implementation of public investment. The government expects the deficit to rise to 2.4% of GDP in 2014, although further under-execution is possible. The increase in public sector wages, effective from 1 July 2014, will increase public spending by about 0.4% of GDP in 2014 and 2015, but has already been budgeted for and will be compensated by an increase in tax collection.

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