Russia’s economic development minister, Aleksey Ulyukaev, says that any further hit to the country’s credit rating would be the result of “political agendas,” stressing that Russia has “one of the lowest debt burdens in the world.”
“There are expectations and rumors that the international ratings agencies will downgrade Russia’s sovereign debt rating,” Ulyukaev told Russian state television. “In my opinion this would be a strange and economically groundless decision.”
The official stated that Russia’s external debt totals less than three percent of GDP, and “could be repaid within a single year,” considering Russia’s cash reserves, which amount to about US$450 billion. Ulyukaev also insisted that Russia’s budget for the next three years contains no more than a “negligible” deficit, and assured that the floating ruble exchange rate has protected Russia against falling oil prices.
“Our macroeconomic and financial construction is extremely solid. To cut our sovereign debt rating in such circumstances would be a sign of incompetence, or a political agenda, and the latter seems more likely,” he said.
International ratings agencies lowered Russia’s ratings in April, after Crimea’s accession into Russia. Fitch currently places it at BBB, two levels above junk, Moody’s at Baa1, three levels above junk, and S&P at BBB-minus, just one notch above junk. All three of the world’s biggest ratings firms predict a negative outlook.
Their representatives have rebuffed accusations of political prejudice, and say that their ratings are predicated on the continuing instability in neighboring Ukraine, the prospect of extended and new sanctions, and the Russian economy – which is not predicted to grow this year.
Ulyukaev bemoaned that even if any potential fall in the rating does not affect the state directly, Russian companies will find it increasingly difficult to borrow on the international markets, as well as service their existing debt.
“This would have a negative impact on the Russian economy,” the official stated.
Ulyukaev said that Russia was considering partnering up with China and other states to support new ratings agencies that would not be run out of New York City, like the current Big Three. But the minister admitted that the ratings sector in Russia is “young” and has not built up international credibility.
“We are preparing legislation that will help to regulate the ratings sector,” promised Ulyukaev.