Fitch Ratings has affirmed Russia's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BBB' with a Stable Outlook.
Russia's 'BBB' IDRs balance its credible and consistent policy framework, and robust public and external balance sheets, underpinned by a solid sovereign net foreign assets position and low government debt, with low growth prospects, high commodity dependence and weak governance indicators relative to peers.
The Stable Outlook reflects Fitch's view that Russia's policy response to the unprecedented shock of the COVID-19 pandemic and extreme volatility in oil prices will contribute to anchor macroeconomic stability improvements and preserve the strength of the sovereign balance sheet. Moreover, a strong commitment to inflation targeting, exchange rate flexibility and a prudent fiscal strategy support Russia's increased resilience to shocks and reduce the impact of oil price volatility on the economy.
The Russian banking sector entered the crisis with improved capital buffers (14.4% total capital adequacy ratio at end-May, excluding the Central Bank of Russia's 'bad bank'), lower external debt, reduced systemic risks as a result of regulator's 'clean-up' process and regulatory upgrades. The banking sector did not experience liquidity pressures in 2Q20 and the central bank has provided temporary regulatory forbearance providing space for banks to absorb the negative impact of the shock while maintaining credit availability.
The full text of Fitch Ratings' forecast can be read on its website (https://www.fitchratings.com/research/sovereigns/fitch-affirms-russia-at-bbb-outlook-stable-07-08-20....