In the West, to believe again in Russia

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www.vsyako.netPhoto: Ilya Naymushin / REUTERS

German rating Agency Scope Ratings has affirmed the long-term sovereign rating of Russia at BBB-, but changed the Outlook on it from negative to positive. The reason was doubts about the Agency that possible sanctions against Russian government debt will be effective. This is stated in the review of the Agency.

According to the Agency, in the future 12-18 months, the rating of Russia may be higher if it will continue the prudent fiscal policies, and the potential growth of the economy will increase as a result of structural reforms.

Scope Ratings also note that the main advantages of Russia at the moment are the quality of public finances and resilience to external risks. Thus, public debt in 2018 amounted to 14 percent of GDP, the Agency said, citing data from the International monetary Fund. By 2024, projected to increase to 16.4 percent. This is below the conservative threshold set by the Russian government at 20 percent.

At the end of 2018, Russia’s state debt minus budget balances and assets of the national welfare Fund was less than one percent of GDP, which is one of the lowest levels among the countries, which assesses the rating of this Agency. The experts also highlighted low currency risks for public debt, because about 75 percent of the total debt is denominated in rubles.

The document also emphasizes Russia’s commitment to the new budgetary rule according to which the windfall from oil at the cost of a barrel above $ 40 are sent to the national welfare Fund, high-quality administration of tax collection and reduce pension costs by raising the retirement age and the increase in VAT in 2019 from 18 to 20 percent.

Meanwhile, the key negative factors analysts cited the low economic growth potential, problems with governance, geopolitical tensions over Ukraine and the risk of increased sanctions in this regard. The latter, in particular, does not allow Russian companies to access global capital markets, says the review.

Video, photo All from Russia.

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