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Akbar Novruz

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Progress in the peace process with Azerbaijan could further strengthen Armenia’s sovereign credit profile, Fitch Ratings said, revising the outlook on Armenia’s Long-Term Foreign-Currency Issuer Default Rating (LTFC IDR) to Positive from Stable while affirming the rating at ‘BB-’, Azernews reports.

In its latest assessment, Fitch pointed to a joint declaration signed by Armenia and Azerbaijan aimed at reaching a comprehensive peace agreement, noting that the move has significantly reduced near-term risks of military escalation. The agency highlighted that trade with and through Azerbaijan has begun to open, while relations with Türkiye are substantially improving, with reports that Ankara is considering reopening its land border with Armenia.

Fitch said these developments could generate additional upside to Armenia’s medium-term growth outlook, particularly if the peace agreement is implemented in a sustained manner and regional connectivity is restored through the reopening of borders and transport routes.

At the same time, the agency warned that negative rating action could follow if geopolitical risks increase or if political and economic stability is undermined—specifically citing the derailment of the current peace process with Azerbaijan as a key downside risk.

Conversely, Fitch identified a durable decline in geopolitical risk and domestic political uncertainty as a potential trigger for a future upgrade, again emphasizing that meaningful progress in the peace process with Azerbaijan would be central to such a scenario.

The rating agency’s comments come against the backdrop of a high-profile diplomatic breakthrough on August 8, 2025, in Washington, where President Ilham Aliyev, US President Donald Trump, and Armenian Prime Minister Nikol Pashinyan signed a joint declaration. One provision of the document предусматривает the launch of the “Trump Route for International Peace and Prosperity” (TRIPP), designed to unblock regional communications.

During the same meeting, Azerbaijan’s Foreign Minister Jeyhun Bayramov and Armenia’s Foreign Minister 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 jointly appealed to the current OSCE Chairperson-in-Office to terminate the OSCE Minsk Group process, marking a symbolic shift away from the long-standing mediation format.

Overall, Fitch’s assessment underscores how regional normalization and reconciliation with Azerbaijan are increasingly seen not only as political milestones for Armenia, but also as key drivers of economic confidence and sovereign creditworthiness.