News & Analysis

S&P offers Belarus ratings boost

US-based international credit ratings agency Standard & Poor’s has affirmed the long and short-term foreign and local currency sovereign credit ratings of Belarus at the current ‘B/B’ level with a stable outlook, Belarusian state news agency Belta has reported.

“The stable outlook reflects our expectation that Belarus’ external imbalances will not escalate while the fiscal stance remains comparatively tight over the next 12 months, and that the government will retain market access and support from Russia to refinance upcoming public debt redemptions,” the ratings agency said in a statement.

S&P’s analysts said that the ratings boost was primarily supported by the financial assistance Belarus receives from Russia, and improved macroeconomic policy-making of recent years.

At the same time, the country’s sovereign ratings remain “constrained” by its low institutional effectiveness, vulnerable fiscal positions and the still-limited flexibility of its monetary policy.

S&P expects the Belarusian economy to expand by two per cent in 2019, however, the growth rate is projected to stagnate in the coming years, with a two per cent expansion expected in both 2020 and 2021, respectively.

“Despite some recovery, the investment outlook remains cautious, as demonstrated by sluggish growth in corporate credit. Foreign investment is unlikely to stimulate growth, given the perception of the risky business environment in Belarus,” the analysts said, stressing that “the state’s extensive role in the economy and the existence of a multitude of loss-making public enterprises” is one of the main structural constraints.