Russian Long-Term Ratings Raised as Economic and Political Reform Continues; Outlook Stable
Standard & Poor's Rating Services said today that it raised its long-term local and foreign currency sovereign credit ratings on The Russian Federation to double-'B'-minus from single-'B'-plus.
Jul 26, 2002
LONDON (Standard & Poor's) -- Standard & Poor's Rating Services said today that it raised its long-term local and foreign currency sovereign credit ratings on The Russian Federation to double-'B'-minus from single-'B'-plus. At the same time, Standard & Poor's affirmed its single-'B' short-term local and foreign currency sovereign credit ratings on Russia. The outlook on the sovereign's ratings has been revised to stable from positive.
"The upgrade reflects improving governability in The Russian Federation and an enhanced debt management policy, as manifested by ongoing progress in passing important legislation and by continuing budgetary discipline," said sovereign analyst Helena Hessel. "In particular, the passage of a politically challenging bill on the legal purchase and sale of agricultural land indicates close policy coordination between the executive and legislative branches. The change of management at the Russian Central Bank has increased the prospects for the implementation of important banking reform and financial liberalization, while recent developments in the politically influential Gazprom also indicate progress in rationalizing Russia's energy sector," she added.
According to Mrs. Hessel, the stable outlook reflects the expectation of sustained prudent fiscal and debt management, and further progress in reform implementation. "An acceleration of reform, particularly in the banking sector, would improve Russia's creditworthiness," said Mrs. Hessel. "The 2003 budget (targeting a surplus of 0.8% of GDP) and financial flexibility afforded by the Reserve Fund--which could grow up to Russian ruble 180 billion ($5.5 billion) by end-2002--are also significant positive factors."
Mrs. Hessel also said, however, that progress on the realization of judicial and administrative reform is noteworthy, although improvements to the functioning of the state and judicial apparatus have been negligible thus far.
A complete list of ratings is available to RatingsDirect subscribers at www.ratingsdirect.com as well as on the Standard & Poor's public Web-site at www.standardandpoors.com under Ratings Actions/Newly Released Ratings.
"The upgrade reflects improving governability in The Russian Federation and an enhanced debt management policy, as manifested by ongoing progress in passing important legislation and by continuing budgetary discipline," said sovereign analyst Helena Hessel. "In particular, the passage of a politically challenging bill on the legal purchase and sale of agricultural land indicates close policy coordination between the executive and legislative branches. The change of management at the Russian Central Bank has increased the prospects for the implementation of important banking reform and financial liberalization, while recent developments in the politically influential Gazprom also indicate progress in rationalizing Russia's energy sector," she added.
According to Mrs. Hessel, the stable outlook reflects the expectation of sustained prudent fiscal and debt management, and further progress in reform implementation. "An acceleration of reform, particularly in the banking sector, would improve Russia's creditworthiness," said Mrs. Hessel. "The 2003 budget (targeting a surplus of 0.8% of GDP) and financial flexibility afforded by the Reserve Fund--which could grow up to Russian ruble 180 billion ($5.5 billion) by end-2002--are also significant positive factors."
Mrs. Hessel also said, however, that progress on the realization of judicial and administrative reform is noteworthy, although improvements to the functioning of the state and judicial apparatus have been negligible thus far.
A complete list of ratings is available to RatingsDirect subscribers at www.ratingsdirect.com as well as on the Standard & Poor's public Web-site at www.standardandpoors.com under Ratings Actions/Newly Released Ratings.