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LOOKING AT ARMENIA'S ELECTION ON THE (CREDIT-) POSITIVE SIDE
by Giorgi Lomsadze
EurasiaNet.org
http://www.eurasianet.org/node/65404
May 15 2012
NY
Armenia's May 6 parliamentary election may have left less space for
political checks and balances than desired, but it could lead to more
financial cheques. While opposition parties cry fraud and observers
frown at irregularities, the triumph of Armenian President Serzh
Sargsyan's ruling Republican Party of Armenia at the polls is a "credit
positive" event for Armenia, according to Moody's Investor Service.
That the Sargsyan-loyal parliamentary majority has become even a
larger majority will have a stabilizing effect on Armenia's national
creditworthiness, Bloomberg reported, citing Moody's Investor Service.
The election outcome "will ensure a degree of political stability
and policy continuity," Moody's analysts are quoted by Bloomberg as
saying. And that policy has been to reduce government deficit and
improve tax collection.
Yet Armenia's creditworthiness still carries a junk rating. The Ba2
grade on Moody's list of naughty-and-nice countries (ranked by their
ability to repay loans) means that lenders to Armenia run "significant"
risk. Armenia has little external shock-absorption capacity thanks to
its high dependence on the volatile Russian and EU markets, Moody's
wrote in November last year. Though Armenia has convalesced from
its 2009 slump, Moody's assessment for Armenia's credit outlook has
remained "negative" ever since.
Trade aspects aside, Armenia's eternal feud with Azerbaijan over
Nagorno-Karabakh enclave is also bad for credit. Same goes for
Azerbaijan, but, thanks to its massive oil-and-gas wealth, Baku has
little to worry about with its credit reputation. Moody's recently
upgraded by a notch the country's rating to Baa3; ergo, acceptable
ability to repay a short-term loan.
With a Ba3 rating, Georgia also does not fall into any of the star
categories in Moody's ratings, but its outlook is stable. A recent
decision to sell a 25-percent stake in the state-owned railway
monopoly was also a "credit positive" move by Georgia, according to
the financial wonks.
From: Baghdasarian
by Giorgi Lomsadze
EurasiaNet.org
http://www.eurasianet.org/node/65404
May 15 2012
NY
Armenia's May 6 parliamentary election may have left less space for
political checks and balances than desired, but it could lead to more
financial cheques. While opposition parties cry fraud and observers
frown at irregularities, the triumph of Armenian President Serzh
Sargsyan's ruling Republican Party of Armenia at the polls is a "credit
positive" event for Armenia, according to Moody's Investor Service.
That the Sargsyan-loyal parliamentary majority has become even a
larger majority will have a stabilizing effect on Armenia's national
creditworthiness, Bloomberg reported, citing Moody's Investor Service.
The election outcome "will ensure a degree of political stability
and policy continuity," Moody's analysts are quoted by Bloomberg as
saying. And that policy has been to reduce government deficit and
improve tax collection.
Yet Armenia's creditworthiness still carries a junk rating. The Ba2
grade on Moody's list of naughty-and-nice countries (ranked by their
ability to repay loans) means that lenders to Armenia run "significant"
risk. Armenia has little external shock-absorption capacity thanks to
its high dependence on the volatile Russian and EU markets, Moody's
wrote in November last year. Though Armenia has convalesced from
its 2009 slump, Moody's assessment for Armenia's credit outlook has
remained "negative" ever since.
Trade aspects aside, Armenia's eternal feud with Azerbaijan over
Nagorno-Karabakh enclave is also bad for credit. Same goes for
Azerbaijan, but, thanks to its massive oil-and-gas wealth, Baku has
little to worry about with its credit reputation. Moody's recently
upgraded by a notch the country's rating to Baa3; ergo, acceptable
ability to repay a short-term loan.
With a Ba3 rating, Georgia also does not fall into any of the star
categories in Moody's ratings, but its outlook is stable. A recent
decision to sell a 25-percent stake in the state-owned railway
monopoly was also a "credit positive" move by Georgia, according to
the financial wonks.
From: Baghdasarian