A narrow economic base, overdependence on the oil and gas sector and the weakness of various institutions are key negative factors which mar Russia’s credit ratings, Standard Poor’s analysts said in a report on Friday.
SP affirmed its BBB long-term credit rating on hard currency liabilities and BBB+ long- and short-term ratings in national currency for Russia. But it said the agency was not going to raise the ratings as the country’s development was restrained by an unfavorable investment and business climate, high corruption and low competitiveness.
The agency forecasts growth of Russia’s gross domestic product level in mid-term at 3.5 percent a year in 2013-2015, with the oil and gas sector continuing to play a dominant role in the Russian economy. SP also notes Russia still suffers from “significant” loss of tax revenue because some Russian companies transfers their incomes to tax havens such as Cyprus.
Among the political risks, SP analysts stress the low expectancy of an adjustment in Russian policy in the near future and slow implementation of structural reforms, due to a lack of change in the political elite following the parliamentary elections in December 2011 and presidential polls in March 2012.