BAKU, Azerbaijan, June 8. The re-election of
Armenia’s ruling Civil Contract party could help advance the peace
agenda with Azerbaijan and is broadly supportive of the country’s
credit profile, according to an assessment by S&P Global
Ratings.
The rating agency said the victory of Prime Minister Nikol
Pashinyan’s party in the June 7 parliamentary elections provides
the government with a renewed mandate to pursue its policy agenda
and reduces near-term political uncertainty.
“We consider the result to be broadly supportive of Armenia’s
credit quality because it bolsters policy continuity and could
strengthen the government’s ability to advance peace negotiations
with Azerbaijan,” S&P said.
According to the agency, the election outcome should support
policy continuity and enhance the government’s capacity to
implement its agenda, including deeper engagement with Western
partners, structural reforms aimed at improving the business
environment, and fiscal consolidation under the medium-term
expenditure framework.
S&P believes that successful implementation of these
policies would help stabilize public finances, gradually reduce
debt levels, improve the regulatory environment, attract
investment, and strengthen Armenia’s macroeconomic
fundamentals.
The agency highlighted regional normalization as one of the most
important potential consequences of the election result.
“We view regional normalization as one of the most significant
potential implications of the election outcome because it could
reduce geopolitical risk, support investment and trade, and
strengthen Armenia’s medium-term growth prospects,” the report
noted.
Improved relations could also facilitate greater trade and
transport connectivity over the longer term, including potential
links through Türkiye.
At the same time, S&P cautioned that Armenia’s efforts to
deepen engagement with Western partners and pursue closer ties with
the European Union will remain challenging due to the country’s
extensive economic integration with Russia.
According to the agency, Armenia continues to rely heavily on
Russia through trade, remittances, tourism, energy supplies, and
its membership in the Eurasian Economic Union.
S&P noted that Russia has recently imposed restrictions on
imports of certain Armenian goods and expressed concerns over
Armenia’s growing engagement with Western partners, underscoring
the difficulties Yerevan faces in balancing closer Western ties
with its continued economic dependence on Moscow.
The agency warned that any further deterioration in relations
with Russia could weigh on economic growth, external inflows, trade
access, and energy security, potentially putting pressure on
Armenia’s external indicators.
While Armenia is expected to continue diversifying its external
partnerships, S&P believes progress is likely to remain gradual
given the country’s deep economic links with Russia.
