Moody’s cuts Belarus’s rating to B3

• 22.07.2011, 13:19

Moody’s Investors Service cut on Thursday Belarus’s sovereign credit rating from B3 to B2 with prospects of further downgrading.

The country’s ceiling was lowered to B3 from B1, RIA Novosti informs.

The country’s ratings remain on review for further possible downgrade.

The decrease has been caused by the likelihood of the government securing additional external financing and implementing policies to repair macro-economic distortions, Moody’s says.

Besides, the rating cut was prompted by foreign exchange shortages, national currency devaluation, the limited external assistance and concerns about the political and economic situation.

Moody’s experts say Belarus needs structural reforms to transit to economic growth based on increases in productivity and competitiveness. On the other hand, if the prospect of political upheaval were to keep authorities from reducing social spending, then macro-economic distortions will persist and medium-term economic and financial risks would be heightened.

S&P Rating Services placed Belarus’s long-term and short-term credit ratings on CreditWatch with negative implications and lowered the country’s long-term local currency sovereign credit rating.

S&P said further downgrading was possible if prospects of external financing (in particular, loans from the Eurasian Economic Community and income from privatization) are not implemented or implemented partially, which can lead to further fall of the national currency and stressful situation in economy.

In March, S&P cut Belarus’s long-term foreign currency credit rating from ‘B’ to ‘B+’ with negative outlook.