Fitch Retains Russia Rating

Back in September 2017, Fitch (with Russia rating BBB-) estimated that the US sanctions were costing Russia “one notch” in terms of sovereign ratings, with ex-sanctions risk conditions for the Russian sovereign debt at BBB. Last week, Fitch retained long-term debt rating for Russia at BBB- with positive outlook, noting the Russian economy’s relative resilience to sanctions, Seeking Alpha reported. Fitch analysis projects the budget surplus to average 0.1% of GDP in 2018 and 0.3% in 2019 from deficits of 1.0% and 0.5% respectively. This and Russia’s strong performance in monetary policy have been noted by Fitch as core markers of the Russian economy’s resilience to external shocks, including the sanction acceleration announced back in April 2018. Looking forward, President Vladimir Putin’s RUB 8.0 trillion ($127 billion) new spending priorities announced back in May will amount to roughly 7.0% of GDP over the next six years. These funds will go to support higher wages and pensions for the recipients of federal and local funding, as well as public investment uplift in education and core infrastructure. “Due to a stronger fiscal position and a robust oil price outlook, the planned measures will not threaten the country’s future budget surpluses,” Fitch said.