Can rating agencies ruin Russian economy?
Russian Economic Development Minister Alexei Ulyukayev said that international agencies may soon downgrade Russia, adding that it would be an unfounded move, because the country’s economic indicators remain at a high level. According to the minister, the decision will be based on political motives.
Russian experts believe that there is a political constituent indeed. Yet, Western experts exclude such a possibility, claiming that credit rating agencies in the West are most independent, honest, accurate, etc.
The rating of a country serves as a guide to potential foreign investors. If partners and investors have certain negative expectations related to economic development of a country, it is likely and should be reflected in the rating.
Will such ratings harm Russia? According to the expert, one needs to understand that Russia’s foreign borrowings are relatively small and they are not expected to grow. The possible damage is small.
Therefore, downgraded rating will obviously affect Russia’s operations, especially operations of Russian companies on external markets. Yet, it will not show a serious influence on financial indicators.
“Naturally, it affects borrowing opportunities that are already restricted. Many banks are guided by international ratings agencies when dealing with issues of crediting for this or that country. The risks that are incorporated in these ratings reflect crediting decisions on the part of the banks from other countries.”
Source: pravda- Can rating agencies ruin Russian economy?
