Moody’s improved the Outlook on the credit rating of Russia to “stable”

Photo: Scott Eells / Bloomberg

Rating Agency Moody ‘ s has improved to stable the Outlook on sovereign credit rating of Russia. The reason for this was the adoption of the government strategy of fiscal consolidation

Moody’s improved the Outlook on the sovereign credit rating of Russia from “negative” to “stable” level, says the message of the organization.

In addition, Moody’s has left Russia’s credit rating at Ba1, according to the scale of the Agency is non-investment or “junk” level.

The Agency indicated that the main factors to change the Outlook on the credit rating was the “government’s adoption of the medium-term fiscal consolidation strategy, which should reduce the government’s reliance on oil and gas revenues and to allow a gradual replenishment of the stockpile.” Moody’s indicates that, in addition to this, the Russian economy is now recovering after two years of recession.

To improve the Outlook on the rating contributes to the rise in oil prices, which are consistent with the assumptions of the Russian government’s budget indicates the Agency.

In addition, Moody’s indicates that the potential for economic growth in Russia is quite weak compared to other countries with similar income levels, which puts pressure on the rating. The recession in 2015-2016 was lower than previously thought, and in 2015 growth was 2.5% instead of the expected 3.7 percent.

“In the absence of structural reforms, leading to high levels of poverty, the reduction of the population of working age and many other factors that deter investment, the rating Agency expects that potential growth will remain at 1.5 — 2%,” writes Moody’s.

The Agency also writes that, despite the financial and external strengths of Russia, on the creditworthiness of the country put pressure geopolitical risks including conflicts in Ukraine and Moscow’s participation in the operation in Syria.

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