Political unrest in Belarus increases risks for macroeconomic and financial stability ¬– Fitch Ratings
<p> MINSK, Dec 16 - PrimePress. Greater political unrest in Belarus could lead to additional pressure on international reserves and deposit outflows, increasing risks for macroeconomic and financial stability. Alternative sources of financing and cash buffers mitigate near-term financing risks, says Fitch Ratings. </p> <p> </p> <p> According to Fitch, Belarus’ political crisis following the August presidential elections have negatively affected international reserves and banks, which led Fitch to revise the Outlook on Belarus’ ‘B’ Long-Term Foreign-Currency Issuer Default Rating to Negative from Stable in November. </p> <p> </p> <p> The political crisis retains potential for intensification and creates risks of renewed social unrest, strikes, additional diplomatic tensions with western countries and potentially harsher sanctions beyond those in place, which are aimed at several government officials including the president, reads the report. </p> <p> </p> <p> “We expect international reserves to weaken relative to peers in 2021-2022, while reduced domestic confidence will maintain pressure on banks' liquidity. Further weakening of the Belarusian ruble could negatively affect debt dynamics due to high currency risks as well as banks' asset quality and capitalization,” Fitch says. </p> <p> </p> <p> The political crisis could also lead to increased political pressures on the National Bank of the Republic of Belarus to support growth and could create uncertainty regarding policy direction and risks for macroeconomic stability improvements in recent years that have stemmed from greater consistency between monetary, wage and fiscal policies. </p> <p> </p> <p> Belarus fulfilled most of its 2020 financing requirements before August and near-term fiscal and external financing risks are contained due to the availability of alternative sources of financing and cash buffers. China and Russia (including the Eurasian Fund for Stabilization and Development), account for most outstanding external debt and 2021-2022 external amortizations. New Russia-related financing reflects its long track record of financial support for Belarus, says the agency </p> <p> </p> <p> As previously reported, on November 13, 2020, Fitch Ratings revised the Outlook on Belarus’ Long-Term Foreign-Currency Issuer Default Rating (IDR) to Negative from Stable and affirmed the IDR at ‘B’ amid the political crisis in the country. After that, Fitch did the same in relation to the Development Bank of the Republic of Belarus, Belarusbank, BPS-Sberbank, Belinvestbank, Bank BelVEB and Eurotorg LLC. Also Fitch revised from ‘Stable’ to ‘Negative’ the Outlook on the financial strength rating of the Belarusian Republican Unitary Insurance Company Belgosstrakh, Belarusian republican unitary enterprise Eximgarant and Belarusian National Reinsurance Organization, and affirmed their FSR at ‘B.’ End </p>
2020-12-17
Primepress
MINSK, Dec 16 - PrimePress. Greater political unrest in Belarus could lead to additional pressure on international reserves and deposit outflows, increasing risks for macroeconomic and financial stability. Alternative sources of financing and cash buffers mitigate near-term financing risks, says Fitch Ratings.
According to Fitch, Belarus’ political crisis following the August presidential elections have negatively affected international reserves and banks, which led Fitch to revise the Outlook on Belarus’ ‘B’ Long-Term Foreign-Currency Issuer Default Rating to Negative from Stable in November.
The political crisis retains potential for intensification and creates risks of renewed social unrest, strikes, additional diplomatic tensions with western countries and potentially harsher sanctions beyond those in place, which are aimed at several government officials including the president, reads the report.
“We expect international reserves to weaken relative to peers in 2021-2022, while reduced domestic confidence will maintain pressure on banks' liquidity. Further weakening of the Belarusian ruble could negatively affect debt dynamics due to high currency risks as well as banks' asset quality and capitalization,” Fitch says.
The political crisis could also lead to increased political pressures on the National Bank of the Republic of Belarus to support growth and could create uncertainty regarding policy direction and risks for macroeconomic stability improvements in recent years that have stemmed from greater consistency between monetary, wage and fiscal policies.
Belarus fulfilled most of its 2020 financing requirements before August and near-term fiscal and external financing risks are contained due to the availability of alternative sources of financing and cash buffers. China and Russia (including the Eurasian Fund for Stabilization and Development), account for most outstanding external debt and 2021-2022 external amortizations. New Russia-related financing reflects its long track record of financial support for Belarus, says the agency
As previously reported, on November 13, 2020, Fitch Ratings revised the Outlook on Belarus’ Long-Term Foreign-Currency Issuer Default Rating (IDR) to Negative from Stable and affirmed the IDR at ‘B’ amid the political crisis in the country. After that, Fitch did the same in relation to the Development Bank of the Republic of Belarus, Belarusbank, BPS-Sberbank, Belinvestbank, Bank BelVEB and Eurotorg LLC. Also Fitch revised from ‘Stable’ to ‘Negative’ the Outlook on the financial strength rating of the Belarusian Republican Unitary Insurance Company Belgosstrakh, Belarusian republican unitary enterprise Eximgarant and Belarusian National Reinsurance Organization, and affirmed their FSR at ‘B.’ End