Fitch: Peace process with Azerbaijan may strengthen Armenia's financial position

Progress in the peace process with Azerbaijan may positively affect Armenia's credit rating, reports Fitch Ratings.

Fitch revised the outlook on Armenia's Long-Term Foreign Currency Issuer Default Rating (LTFC IDR) from "Stable" to "Positive" and affirmed the rating itself at BB-.

"Armenia and Azerbaijan have signed a joint declaration aimed at achieving a peace agreement, which significantly reduces the risks of military escalation in the short term. Trade with Azerbaijan and through its territory is gradually opening up. Relations with Turkey are also noticeably improving, and, according to reports, the Turkish government is considering opening the land border with Armenia," the Fitch report notes.

The agency believes that additional potential for growth in Armenia's medium-term economic outlook may emerge with the consistent implementation of a peace agreement with Azerbaijan and the opening of the border with Turkey.

Among the factors that could negatively impact the rating, Fitch cites events that increase geopolitical risks and undermine political and economic stability, such as the disruption of the current peace process with Azerbaijan.

Agency analysts indicate that factors that could lead to a rating upgrade include a sustainable reduction in geopolitical risks and internal political uncertainty, for example, through significant progress in the peace process with Azerbaijan.

It should be noted that on August 8, 2025, following a trilateral meeting with US President Donald Trump in Washington, President of Azerbaijan Ilham Aliyev and Prime Minister of Armenia Nikol Pashinyan signed a joint declaration on ensuring peace between Baku and Yerevan and establishing transport links between the main part of Azerbaijan and Nakhchivan. This project was named "Trump Route for International Peace and Prosperity."

During the meeting, the Minister of Foreign Affairs of the Republic of Azerbaijan Jeyhun Bayramov and the Minister of Foreign Affairs of the Republic of Armenia Ararat Mirzoyan initialed the draft "Agreement on the Establishment of Peace and Interstate Relations between the Republic of Azerbaijan and the Republic of Armenia" and signed a joint appeal from the Ministers of Foreign Affairs of the Republic of Azerbaijan and the Republic of Armenia to the OSCE Chairperson-in-Office (on closing the OSCE Minsk Process, the Personal Representative of the OSCE Chairperson-in-Office on the conflict dealt with by the Minsk Conference, and the High-Level Planning Group).

Recall that earlier, international rating agency Moody's Ratings conducted a periodic review of Azerbaijan's sovereign rating and maintained the country's long-term issuer rating at Baa3, with the rating outlook at "positive."