Central Bank Chief: Final Peace Deal Would Strengthen Armenia’s Economic Outlook

By Alexander Pracht

The potential full signing of a peace agreement with Azerbaijan would have a “huge impact” on reducing the country’s risk premium and attracting foreign investment, Armenia’s Central Bank Governor said on Tuesday.

Speaking in parliament, Martin Galstyan said that signals from international partners in recent weeks have been largely positive. He was responding to a question from lawmaker Babken Tunyan about how the documents signed in Washington last month have influenced perceptions of Armenia’s economic risk.

“In discussions with our partners, whether international organizations or commercial institutions, the feedback has been quite encouraging,” Galstyan said.

He noted, however, that some uncertainty remains. While the Fitch ratings agency has not revised Armenia’s sovereign rating, it has issued a positive outlook, Galstyan explained. 

Fitch, one of the “big three” global credit rating agencies, evaluates a country’s ability to repay debt and its risk of default. Last month, the agency said a future peace deal between Armenia and Azerbaijan could support improved ratings for both countries. However, Fitch cautioned that any agreement would be “unlikely to immediately affect” either country’s creditworthiness.

It also noted that, unlike Armenia, Azerbaijan’s rating is constrained by weak governance metrics that a peace deal alone would not resolve. Armenia’s current rating is BB-, below Azerbaijan’s BBB-, which is considered stronger.

Turning to macroeconomic trends, Galstyan said the Central Bank may reassess Armenia’s growth potential. Supporting strong growth in recent years, the bank has gradually lowered its key interest rate from 10.75% two years ago to 6.75% today. He explained that geopolitical risks previously kept the country’s risk premium elevated, but those risks have now eased. 

“This will also influence our policy decisions,” he concluded.