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.
