Fitch Ratings has assigned Armenian capital city of Yerevan Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) of “B+” and a Short-Term Foreign Currency IDR of “B,” it said in a statement.

The Outlooks on the Long-Term IDRs are Stable. The ratings reflect Yerevan’s status as Armenia’s capital, satisfactory budgetary performance, supported by steady transfers from the central government, and a debt-free status.

In its base case scenario, Fitch expects the city to maintain satisfactory fiscal performance with an operating margin of 2%-3% in 2016-2018 (2011-2015: average 7.5%). The lower than historical margins will be driven by continued adjustment of the city’s operating revenue to negative shocks resulting from the protracted slowdown of Armenia’s economy in 2014-2015.

“We also expect Yerevan to run a slight surplus before debt variation of 1%-2% of total revenue in 2016-2018, after an average deficit of 1% in 2011-2015. Fitch projects Yerevan city’s operating revenue will total AMD78bn in 2016, up 3% yoy,” a statement said.

“Capital spending is likely to decrease slightly to about AMD7bn-AMD8bn in 2016-2017 (2015: AMD9bn) before rising to about AMD10bn in 2018. It will likely remain at below 10% of total expenditure, significantly below the average of 22% in 2011-2015, when the city made material infrastructure investment funded by state transfers and donor grants.”