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terms of IFRS impaired loans. Authorities introduced macroprudential measures in May in response to rapid household credit growth.
Political power is concentrated in the hands of President Lukashenko, who has been in power since 1994, and Fitch assumes that Lukashenko will remain in power over the medium term. In the aftermath of the resolution of the gas price dispute, bilateral relations with Russia are currently stable. Russia is a key partner for Belarus from a trade, financing and political perspective.
SOVEREIGN RATING MODEL (SRM) and QUALITATIVE OVERLAY (QO) Fitch's proprietary SRM assigns Belarus a score equivalent to a rating of 'BB-' on the Long-Term Foreign Currency (LTFC) IDR scale. Fitch's sovereign rating committee adjusted the output from the SRM to arrive at the final LTFC IDR by applying its QO, relative to rated peers, as follows:
- Macro: -1 notch, to reflect weaker medium-term growth prospects relative to rating peers.
- External finances: -1 notch, to reflect a high gross external financing requirement, low net international reserves, and reliance on often ad hoc external financial support from Russia to meet external obligations, which is vulnerable to changes in bilateral relations. Belarus's net external debt/GDP is high.
Fitch's SRM is the agency's proprietary multiple regression rating model that employs 18 variables based on three year-centred averages, including one year of forecasts, to produce a score equivalent to a LTFC IDR. Fitch's QO is a forward-looking qualitative framework designed to allow for adjustment to the SRM output to assign the final rating, reflecting factors within our criteria that are not fully quantifiable and/or not fully reflected in the SRM.
8.4 Bank news
The National Bank of Ukraine (NBU) refused permission for the second time to the small Minsk-headquartered state-owned lender Paritetbank that wants to buy the Ukrainian operations of Russia's state-owned Sberbank , after the recent rejection of its first bid by the regulator, the central bank's deputy governor Kateryna Rozhkova told Interfax news agency on August 9. She added that the NBU does not currently see a potential buyer for Sberbank in Ukraine. According to bne IntelliNews ' correspondent in Minsk, Paritetbank has changed its owners between the two bids, and is now owned by the nation's State Property Fund instead of Belarusian President Alexander Lukashenko’s administrative affairs department. In March, the NBU attributed its rejection of the first bid by Paritetbank to "the incompatibility of the applicant with the requirements of the legislation of Ukraine," the NBU said in a statement on March 27, without elaborating.
34 BELARUS Country Report September 2018 www.intellinews.com