Vadzim Iosub: Downgrading Belarus’ rating by Moody’s looks quite logical

The fact that Moody's downgraded the government of Belarus's sovereign issuer and unsecured debt ratings reveals real situation in the country’s financial sector.

Moody's Investors Service has today downgraded the government of Belarus's sovereign issuer and unsecured debt ratings to Caa1 from B3. The rating outlook is negative, says the press release published by the agency.

“The negative outlook reflects Moody's view that Belarus's external payments position is likely to deteriorate further, which in turn could materially weaken the country's ability to service its foreign-currency debt obligations beyond 2015”, - says the statement.

Moody's forecasts that real GDP growth in Belarus will contract by 2.3% in 2015 and by 0.1% in 2016, down from a growth rate of 1.6% in 2014.

“EuroBelarus” Information Service asked Vadzim Iosub, senior analyst of “Alpari” to comment upon Moody’s decisions.

- How does the downgrade of the rating reveal real situation in Belarus’ financial sector?

- My opinion is that it does. Each country against which the negative rating action is applied often states about disagreement with such action, about non-objectiveness of such action, that international agency disregarded something, and that such step is politically motivated. But in reality three major international rating agencies act rather objectively. But we also should understand that their actions are realized with considerable time lag. They can be conducted once in three moths or once in six months. And experts from the rating agencies can disregard the latest news, i.e. the arguments voiced by Moody’s, such as problems with balance of payments, exist. The reason for that is that this year Belarus will get twice as fewer taxes for export of oil products that it was initially planned. But from the latest news we know that negotiations about attracting finances with the EurAsEC's Anticrisis Fund are going on and recently Belarusan delegation has been discussing it with IMF in Washington. By the way, we don’t know the results of these negotiations; and neither the experts of the agency knew them when they were preparing the document on Belarus. That is why downgrading Belarus’ rating by Moody’s looks quite logical. By the way, if the agreement with the EurAsEC's Anticrisis Fund will be reached, which is quite possible, and with IMF, which is less possible, Belarus’ rating should be increased.

- Does the decision made by Moody’s have to do with the recent considerable downgrading of Russia’s rating introduced recently by the leading world agencies?

- It might be, since traditionally, Russia is the main Belarus’ donor. We are talking both about financial support and about Russian-oriented direction of Belarusan export. Problems in Russia and downgrade of demand for Belarusan goods objectively create difficulties for Belarus’ economy; and that is why correlation with the ratings might be present there.