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Armenian Prime Minister Tigran Sargsyan resigned on April 3, after six years in office. While no reasons were offered, the move followed one day after the defeat of the government's controversial pension reform plans in the Constitutional Court.

Eduard Sharmazanov, a spokesman for the ruling Republican Party of Armenia (HHK) said Sargsyan had initially sought to resign a month ago, but President Serzh Sargsyan persuaded him to stay on to oversee Armenia's ongoing accession talks with the Russia-led Customs Union until the court ruling.

"The [former] prime minister said this was a measured decision which was not taken under the weight of the moment," Sharmazanov told journalists. He also insisted that the move was not connected to a plan for a confidence vote in parliament announced by four opposition parties last week.

According to the Armenian constitution, the resignation of the prime minister means automatic resignation of the entire cabinet. The president will now have to appoint a new prime minister within 10 days and the government should be formed within 20 days of a prime minister's appointment.

Tim Ash at Standard Bank suggests that while unexpected, the resignation is not crucial. "Somewhat out of the blue," he writes, but "note this is not the top job in the country, which is held by President Serzh Sargsyan."

The analyst maintains Armenia's economic performance is robust, largely thanks to external factors. Armenia's membership of the Moscow-led Customs Union, the access it will offer to the markets of Russia, Kazakhstan and Belarus, and the cheap gas membership entails, outplay domestic political risk.

Strong state finances should also trump the effects. "Not sure the departure of the incumbent prime minister will have much impact on the price of sovereign Eurobonds, given [a] fairly strong budget financing position still, with a modest budget deficit, and still various concessionary financing facilities available," Ash continues.

Under the pension reform plan, Armenian citizens born after 1974 were obligated to contribute 5% of their gross salary to private pension funds. The requirement came into force on January 1, after an attempt to introduce voluntary contributions to the second pillar rustled up hardly any takers.

The move sparked widespread protests. The four opposition parties that launched the appeal to the Constitutional Court recently announced their intention to propose a vote of no confidence in Tigran Sargsyan's government on April 28. The Constitutional Court ruled on April 2 that the pension reform legislation is unconstitutional.