Fitch affirms Russia at BBB/Stable.

By bne IntelliNews August 17, 2012
Fitch Ratings affirmed Russias long-term national and foreign currency rating at BBB, outlook Stable, short-term foreign currency rating at F3, and country ceiling at BBB+. Agency attributed the affirmation to strong sovereign balance, a position of net creditor and increased flexibility of the RUB exchange rate. At the same time slow movement towards budget consolidation and structural reforms on the background of volatile oil prices and global uncertainty is seen as major downsides. State debt is estimated at low 11% of GDP, given about 7% of GDP in reserves public balances are seen flexible and resistant to sharp oil price decline. Net external assets stand at 25% of GDP, which is the highest absolute value in the BBB rating category due to Russias 5th largest Fx reserves. While Fitch believes that Russia is less exposed to external shocks than in 2008-2009, chances recovering pre-crisis growth rates of about 7% are slim without substantial structural reforms and despite recent WTO accession. Should the budget not be enhanced additionally, a continuous and rapid oil price decline will weaken public finances and cause negative rating actions. Fitch sees Russias economic growth at 3.8% in 2012 and 3.5% in 2013.
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