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Moody's upgrades Armenia on diversification of economic growth drivers

Moody's upgraded Armenia's local and foreign currency long-term issuer ratings to Ba3 from B1, saying the country's growth drivers have become increasingly diverse, strengthening its economy's resilience to shocks.

As part of the ratings action, Moody's also raised Armenia's foreign currency senior unsecured debt rating to Ba3 from B1. The outlook on all of the ratings was revised to stable from positive.

The rating agency said the sectors that contributed to economic expansion in 2018 are expected to maintain solid growth, including tourism, information technology and light manufacturing.

"The nature and breadth of these growth drivers mark a departure from the traditional sectors of mining and agriculture that have led economic activity over past two decades," said Moody's, which projected Armenia's real GDP growth to hover around 5.5% to 6% over the next few years.

In upgrading the ratings, Moody's also cited ongoing tax measures that could gradually restore some of Armenia's fiscal strength. These include increased digitization of invoicing and tax collection, which contributed to a 25% year-over-year increase in government revenue in the first half of 2019.

Moody's expects Armenia's fiscal deficit to average around 1.5% over 2019-2021, allowing the government debt burden to decline toward 45% of GDP by 2021-2022, from 51% as of 2018.