Fitch Ratings has upgraded Belarus’ Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) to ‘B’ from ‘B-‘. The Outlook is Stable, reads the press release by the agency.
Near-term external financing risks have declined due to the pre-emptive government borrowing, and due to an increase in international reserves, the press release reads.
Foreign currency debt service of $2.6 billion will be covered by a mix of multilateral financing, local market issuance, use of foreign currency cash buffers and potentially a new international bond issuance.
Belarus’ gross external financing requirement (current account deficit plus medium- and long-term amortizations) has declined to 101% of international reserves, from a previous peak of 223% in 2014, according to Fitch.
Sustained reduction in refinancing risks will depend on continued progress on diversifying external financing sources.
Belarus’ better coordination between monetary and fiscal policy, prudent wage policy and greater exchange rate flexibility have supported a rapid decline in inflation. Current account deficits remain contained. The rating also factors in the improved terms of trade, the risks of the financial sector, the state of the state budget and the economic growth prospects.
