Page 32 - BELRptSept18

8.3 International ratings
BELARUS - Rating agency
as of Jan 2018
Bond rating: Moody’s
Caa1(S)
Bond rating: Fitch
B (S)
Bond rating: S&P
B (S)
Fitch Ratings has affirmed Belarus's Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'B' with a Stable Outlook in July.
Belarus's ratings balance improving macroeconomic stability, strong structural profile in terms of income per capita and human development indicators, and a clean debt repayment record against low foreign exchange reserves, relatively subdued growth prospects, a government debt burden highly exposed to foreign currency risks, a weak banking sector, high external indebtedness and weak governance indicators relative to rating peers.
Belarus's cyclical recovery has been stronger than anticipated. Growth reached 2.4% in 2017 and could accelerate further to 3.5% in 2018 supported by reduced external financing constraints, growth in Russia and other trading partners and strong domestic consumption and investment performance. Fitch expects growth to moderate to 2.5% and 2.0% in 2019 and 2020, below the forecast 3.6% and 3.3% for the current 'B' median. A large public sector (estimated at 47% of GDP in 2017) with high leverage and productivity challenges weighs on medium-term growth prospects, which is a rating weakness.
The policy mix is broadly consistent with improved macroeconomic stability. Inflation remains low, falling to 4.1% in June on an annual basis, and Fitch expects this to average 6.0% in 2018, almost half the 2016 level and in line with the National Bank end-year objective. The success of the National Bank's strategy to move toward a fully-fledged inflation targeting regime and reach 5% inflation by 2020 will depend on sustaining policy consistency, and improving monetary policy transmission channels through continued progress in the reduction of financial dollarisation (67% of deposits) and quasi-fiscal programme lending.
32 BELARUS Country Report September 2018 www.intellinews.com