Fitch Forecasts Armenia's State Budget Deficit Above 3.5% Starting in 2027
18.01.2026,
18:53
International rating agency Fitch Ratings expects the Armenian government to achieve its 4.5% state budget deficit target in 2026, but forecasts deficits to be above the government's medium-term target of 3.5% starting in 2027.
YEREVAN, January 18. /ARKA/. International rating agency Fitch Ratings expects the Armenian government to achieve its 4.5% state budget deficit target in 2026, but forecasts deficits to be above the government's medium-term target of 3.5% starting in 2027.
"Fitch estimates the general government deficit in 2025 at 5.0% of GDP, below the budgeted 5.5%, but still above the 'BB' median (3.0%), reflecting lower capital expenditures and interest payments," the agency said in its report.
Analysts note that Armenia's 2026 budget targets a deficit of 4.5% of GDP, amid a reduction in defense spending (down 2.1 percentage points to 4.7% of GDP), while healthcare spending has been increased by 0.5% of GDP to finance the phased implementation of universal health insurance.
The World Bank's "Armenia Monthly Economic Update – December 2025" notes that Armenia's October deficit of 1.4% of projected annual GDP was twice the total deficit for the three quarters. The cumulative deficit for January-October increased to 2.1% of projected annual GDP, with two-thirds of the deficit realized in October. Armenian Finance
Minister Vahe Hovhannisyan previously stated that the budget deficit is planned to be reduced from 5.5% to 4.5% in 2026, to 3.5% in 2027, then to 2.8%, and to 1% by 2030.
"Fitch estimates the general government deficit in 2025 at 5.0% of GDP, below the budgeted 5.5%, but still above the 'BB' median (3.0%), reflecting lower capital expenditures and interest payments," the agency said in its report.
Analysts note that Armenia's 2026 budget targets a deficit of 4.5% of GDP, amid a reduction in defense spending (down 2.1 percentage points to 4.7% of GDP), while healthcare spending has been increased by 0.5% of GDP to finance the phased implementation of universal health insurance.
The World Bank's "Armenia Monthly Economic Update – December 2025" notes that Armenia's October deficit of 1.4% of projected annual GDP was twice the total deficit for the three quarters. The cumulative deficit for January-October increased to 2.1% of projected annual GDP, with two-thirds of the deficit realized in October. Armenian Finance
Minister Vahe Hovhannisyan previously stated that the budget deficit is planned to be reduced from 5.5% to 4.5% in 2026, to 3.5% in 2027, then to 2.8%, and to 1% by 2030.
