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Moody’s confirms Russia’s credit rating, outlook – stable

March 28, 2013, 4:04 UTC+3
According to Moody’s, the flexible exchange rate helps to mitigate the effects of fluctuations in oil prices
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Photo ITAR-TASS

Photo ITAR-TASS

NEW YORK, March 28 (Itar-Tass) – The international rating agency Moody’s on Wednesday confirmed Russia’s credit rating at Baa1. The outlook is stable.

This decision the agency analysts explain by greater flexibility of the exchange rate in Russia, a relatively low level of public debt, including external, the budget balanced for several years ahead and a very low cost of debt servicing.

In addition, Moody’s experts note that Russia preserves a positive current account balance, as well as has significant foreign exchange reserves, the amount of which reaches 475 billion US dollars.

According to Moody’s, the flexible exchange rate helps to mitigate the effects of fluctuations in oil prices. The agency also said that Russia is preparing to take action to combat inflation.

However, analysts have said that there are several factors which, in their view, limit the credit rating of Russia. They are, in particular, the low potential of the economy growth in the post-crisis period, the high level of corruption and disregard for the execution of laws.

Moody’s predicts that in the next few years, the level of oil production in Russia will not change or even decrease. According to the agency, Russia’s gas production will increase however, there is a possibility that the demand for it on the world market will be falling due to the increased production of shale gas.

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