S&P maintains Russia’s stable economic outlook despite sanctions and pandemic

Rating agency Standard & Poors (S&P) has confirmed Russia’s foreign currency sovereign credit rating at BBB-/A-3, giving it a stable outlook.

The agency says Russia's external and fiscal balance sheets show strength and are likely to diminish risks to both fiscal and financial stability brought about by the Covid-19 pandemic as well as the prospect of further international sanctions against the country over geopolitical disagreements.

S&P also acknowledged a possible upgrade to Russia’s rating in the case of further GDP growth and the easing of geopolitical risks.

The rating could go up if the country makes steps to curb long-term fiscal pressures from the aging population, as well as if Russia's fiscal buffers exceed the agency’s current expectations, “which could help mitigate commodity-related revenue volatility.”

On the down side, the rating could drop if Russia faces further international sanctions, which could lead to capital outflows and financial stability risks. The government's balance sheet could also affect the outlook in the case of its substantial decline.

The Russian government said the confirmed rating outlook is a sign that its economic policy has been well managed.

“The decision by S&P Global Ratings to affirm Russia’s foreign currency sovereign credit rating is viewed by us as a yet another confirmation that the government’s economic policy is correct,” said Finance Minister Anton Siluanov, noting that the outlook proves “the Russian economy is resilient enough against potential external shocks.”

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