Fitch Maintains Russia’s Sovereign Rating at ‘BBB’

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The international rating agency Fitch has affirmed Russia’s long-term investment grade credit rating of ‘BBB’ with a stable outlook, the agency said in a statement. The short-term foreign currency credit rating is affirmed at F2.

“Russia’s ‘BBB’ credit rating reflects its reliable and consistent political foundation, a stable level of internal and external fiscal balance,” the agency noted.

In addition, Russia has a “strong position on sovereign net foreign assets and low government debt.” In addition, at the same time, low prospects for economic growth, high commodity dependence and weak corporate governance indicators in comparison with other peer countries.

The Stable Outlook reflects the opinion of the agency’s experts that the response of the Russian Federation to the pandemic and extreme volatility in oil prices will contribute to increasing macroeconomic stability and maintaining the strength of the sovereign balance sheet.

“A strong commitment to inflation targeting, exchange rate flexibility and prudent fiscal policy help to increase Russia’s resilience to shocks and reduce the impact of oil price volatility on the economy,” Fitch believes.

Analysts believe Russia’s GDP will decline by 5.2% in 2020 due to the impact of the coronavirus pandemic, as well as measures that restrain domestic demand and exports. It is noted that economic growth will begin to recover in 2021. Inflation in Russia this year will reach 3.1%, according to the agency.

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