– Fitch Ratings on Monday lowered the rating outlook on Russia as political uncertainty increased and the global economic outlook has worsened since it confirmed the rating in September.
The rating outlook was downgraded to Stable from Positive, while the long-term foreign and local currency Issuer Default Ratings were affirmed at ‘BBB’.
“The likelihood of an upgrade has receded and the balance of risks is better reflected by a Stable Outlook,” said Charles Seville, Director in Fitch’s Sovereign group.
In the long-term, democratic development that leads to better governance could be positive for Russia’s ratings, but in the short term, uncertainty has increased.
The government under pressure is less likely to carry out a fiscal adjustment, to reduce the non-oil fiscal deficit towards its pre-crisis target of 4.7 percent of GDP. Although Russia has fiscal buffers in the shape of its sovereign wealth funds, the underlying position of the public finances has deteriorated.