Russia’s credit ratings unaffected by recent political events

Neither Vladimir Putin’s intention to seek a return to the Kremlin, nor the dismissal of Finance Minister Alexei Kudrin have affected Russia’s sovereign credit ratings, Standard Poor’s said on Tuesday.

Kudrin was ousted on Monday after invoking Medvedev’s wrath by saying he would decline a job in a future Russian government that Medvedev is likely to head. Kudrin cited disagreements with the president on economic policies, in particular, on considerable defense expenditures, as the reason.

The statement came after Medvedev and Prime Minister Vladimir Putin unveiled their plans on Sunday to exchange offices after next year’s presidential elections. Medvedev is expected to replace Putin as the leader of the pro-Kremlin United Russia party and become the country’s prime minister.

“In our view, none of these developments has any immediate impact on the sovereign credit ratings,” Standard Poor’s said in a statement.

“We currently expect no significant departure from current economic and fiscal policies and expect Russian state capitalism and the close links between politics and business to remain unchanged,” the statement added.

Standard and Poor’s upheld Russia’s ratings at BBB/A-3 with a stable outlook for its foreign currency debt and BBB+/A-2 with a stable outlook for local currency issues.

It said, however, that the political changes “could make it more difficult for Russia to deal with such challenges as strengthening the country’s long-term growth potential by improving the business environment, competition, and the productive infrastructure.”

Kudrin’s dismissal as well as Russia’s dependence on oil coupled with a possibility of a further global economic decline could also complicate “efforts to consolidate public finances, following strong expansionary measures during the recent economic crisis,” the statement said.

Putin said on Tuesday that First Deputy Prime Minister Igor Shuvalov will oversee financial issues in the Russian cabinet while Anton Siluanov will become acting finance minister following Kudrin’s dismissal. Both appointments had been approved by Medvedev, he said.

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