News / Russia

Russia slams Moody’s rating cut as 'politically motivated’

Saturday, 21 February 2015 8:41 AM [ Last Update: Saturday, 21 February 2015 9:01 AM ]

Russian Finance Minister Anton Siluanov

Russia has denounced as politically motivated the latest move by the international credit rating agency, Moody’s, to cut the country’s rating to below investment grade, saying the move will not affect the capital market.

“Obviously, the information about the state of the Russian economy, its fiscal and financial policies provided to the agency in a comprehensive volume was ignored. I think when deciding on a downgrade, the agency was guided primarily by political factors,” Russian Finance Minister Anton Siluanov said on Saturday.

The downgrade was based on “unrealistic” forecasts and “pessimistic” assumptions that went well beyond forecasts by the International Monetary Fund (IMF) and the World Bank, the minister added.

He further said Moody’s assessment would fail to have a serious additional impact on the country’s capital market.

The remarks came one day after Moody’s cut Russia’s sovereign rating by one step from Baa3 to Ba1, a speculative or junk grade, citing the impact of the ongoing conflict in neighboring Ukraine as well as the decline in oil prices and the value of the Russian currency ruble.

Russia has been hit with a series of sanctions imposed by the United States and the European Union, which accuse Moscow of supporting pro-Russia forces in eastern Ukraine. The Russian Federation categorically denies the allegation.

The Russian economy has been also strained by falling oil prices. Reports show oil prices have plunged about 50 percent since June last year.

On February 20, Russia’s national currency was trading at 62.38 rubles to USD 1, compared with roughly 35 rubles to the dollar a year ago.

However, Russian President Vladimir Putin said back in December that the economy is to start boosting again in two years in the worst case scenario, saying, “The economy will grow. And our economy will get out of the current situation.”

The Russian finance minister has also repeatedly said that the strength of the Russian economy lies in its low debt, current account surplus and large international reserves, including sovereign wealth funds.

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