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Fitch has Announced the Risks for the New Russian Government
March 4, 2020 11:13


Fitch has announced the risks for the government of Mishustin.

The new Russian government headed by Mikhail Mishustin is empowered to implement national projects in a more efficient way, as Fitch Ratings agency said. However, due to the inability to raise real income, the cabinet of ministers may experience social pressure, as the experts warn.

The new government of Russia led by Mikhail Mishustin is able to implement national projects more efficiently. This is stated in the report of the international Fitch Ratings agency. Better implementation of national projects leads to faster investment growth and improves social welfare, asthe agency states.

At the same time, Fitch does not expect changes in state policy and believes that the inability to raise real income for providinggreater support to the country’s economy entails the risk of social pressure on the government, according to the report. The agency has kept Russia’s sovereign rating at BBB with a stable forecast. Fitch raised it in August 2019. Before this, the rating was at the level BBB-. According to the current study, Russia’s federal budget will remain in surplus, and the government will rely on the domestic market to reach budget goals in 2020–2021.

Fitch notes that the initiatives aimed at increasing real incomes will stimulate investment growth that may reach 2% in 2020–2021. According to the agency, the indicator will still be lower than 2.8% required for the BBB level. In addition, this growth may be affected by the effects of an outbreak of coronavirus influencing external demand, the price of raw materials and lower oil production. The main problem remains the situation around sanctions, as the authors of the study are convinced.

The agency believes that without economic restrictions, Russia could be at the BBB + level. Fitch considers the threat of sanctions escalation as a factor affecting the flexibility of Russia’s external financing, as well as investment and growth prospects.

Author: Anna Dorozhkina

Tags: Russian government Russian economy    

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