Moody’s changes its outlook on Belarus from ‘stable’ to ‘negative’

The International agency Moody’s believes that the risks of refinancing the debt of Belarus have increased, reports Interfax-Zapad.

Moody’s confirmed the long-term issuer ratings of Belarus in foreign and local currency and senior unsecured ratings in foreign currency at B3 but changed its rating outlook from “stable” to “negative,” the agency said in a press release.

“The key drivers for the change in the outlook to negative are heightened debt refinancing risks given tightening economic and financial sanctions that constrain financing options and Belarus’s limited reserves reducing capacity to withstand further shocks amid heightened political instability,” said the press release.

According to experts, during the next 12-18 months, external debt refinancing will be supported by the country’s accumulated reserves and financial assistance from Russia.

Moodyʼs notes that the strengthening of Western sanctions will lead to a deterioration of the economic situation, which will affect tax revenues and, in particular, the income from foreign economic activity. In addition, the budget will come under pressure in the coming years from the potential need to provide financial support to large state-owned enterprises that are subject to sanctions.

Moody’s forecasts the Belarusian budget deficit of 2.6% in 2022. At the same time, the deficit could grow if the risks of deterioration of the situation due to tougher sanctions materialize, the agency experts believe.