Current account deficit could become key risk for Armenia's rating – former finance minister
31.07.2026,
13:21
Armenia's current account deficit could become one of the main factors putting pressure on the country's sovereign rating if it continues to be financed primarily through debt sources.
YEREVAN, July 31. /ARKA/. Armenia's current account deficit could become one of the main factors putting pressure on the country's sovereign rating if it continues to be financed primarily through debt sources. This was stated by former Armenian Finance Minister Vardan Aramyan in an exclusive interview with ARKA news agency.
According to his data, the current account deficit was $85 million in 2022, while by the end of 2025, it will reach approximately $2.6 billion. The main reason for this was the negative balance of merchandise trade, which amounted to approximately $3.8 billion.
"There is no single safe threshold for the current account deficit for developing countries. Its dynamics and structure are more important," Aramyan said.
He noted that the risks would be lower if import growth were driven primarily by purchases of investment-grade machinery and equipment. However, a significant portion of investment in Armenia is concentrated in housing construction and does not directly contribute to the expansion of export potential.
According to the former minister, the current account deficit can be financed through foreign direct investment, private sector external debt, and government debt. However, a significant increase in direct investment inflows is difficult to expect without reliable protection of property rights and a predictable business environment.
"If the deficit continues to be financed by debt rather than productive investment, this could weaken external stability and become a key factor affecting Armenia's rating," Aramyan stated.
Fitch Ratings previously affirmed Armenia's long-term sovereign rating at 'BB-' with a positive outlook. The agency specifically noted the risks associated with a widening current account deficit and rising government debt.
According to his data, the current account deficit was $85 million in 2022, while by the end of 2025, it will reach approximately $2.6 billion. The main reason for this was the negative balance of merchandise trade, which amounted to approximately $3.8 billion.
"There is no single safe threshold for the current account deficit for developing countries. Its dynamics and structure are more important," Aramyan said.
He noted that the risks would be lower if import growth were driven primarily by purchases of investment-grade machinery and equipment. However, a significant portion of investment in Armenia is concentrated in housing construction and does not directly contribute to the expansion of export potential.
According to the former minister, the current account deficit can be financed through foreign direct investment, private sector external debt, and government debt. However, a significant increase in direct investment inflows is difficult to expect without reliable protection of property rights and a predictable business environment.
"If the deficit continues to be financed by debt rather than productive investment, this could weaken external stability and become a key factor affecting Armenia's rating," Aramyan stated.
Fitch Ratings previously affirmed Armenia's long-term sovereign rating at 'BB-' with a positive outlook. The agency specifically noted the risks associated with a widening current account deficit and rising government debt.
