Finance

Home page

Finance

S&P: Armenia to reduce defense spending amid new Constitution and peace process

23 February 2026 10:41 (UTC +04:00)

The Armenian authorities are working on a new draft Constitution, with the document expected to be prepared by March and a referendum planned to be held after the June parliamentary elections, APA-Economics reports.

This was stated in an assessment on Armenia by the international rating agency S&P Global Ratings.

It is noted that the constitutional reform holds particular significance in the context of peace negotiations with Azerbaijan. Specifically, one of the main points of debate is whether references to the 1990 Declaration of Independence will be retained in the preamble of the document. Azerbaijan considers such references as potential territorial claims.

According to S&P’s assessment, progress in negotiations between Armenia and Azerbaijan may reduce security risks in the near term, but the signing and effective implementation of a final and legally binding peace agreement will take time.

The agency also notes that the parliamentary elections scheduled for June will be an important test in terms of political stability and policy continuity. Recent opinion polls indicate that Prime Minister Nikol Pashinyan and his Civil Contract Party remain in the lead. However, it is noted that their level of support has declined compared to the period following the 2021 snap elections. It is emphasized that the opposition is fragmented and that various political and social groups cannot unite around a single leader.

Under the baseline scenario, general policy continuity is expected after the June elections, and the new government is likely to continue pursuing efforts to achieve a comprehensive peace agreement with Azerbaijan.

The assessment also states that spending priorities are being rebalanced: capital investments are being maintained at a high level to support medium-term economic growth, while defense spending is planned to decrease both in nominal terms and as a share of GDP. This reduction is linked to the assessment that security risks may decline in the near term amid ongoing peace negotiations with Azerbaijan.

Rahim Tariverdiyev

Armenia S&P Global Ratings Constitution reform Peace process Azerbaijan Defense spending Nikol Pashinyan Civil Contract Party Parliamentary elections South Caucasus Security risks Economic policy