THE RUSSIAN GOVERNMENT has pointed the finger at the US government after a major ratings agency downgraded its debt to “junk” status.
The embattled economy, which has been slammed with the sudden drop in energy prices over recent months, was stripped of its investment-grade rating by Standard & Poor’s for the first time in more than a decade.
Western sanctions have already shut many of its corporate borrowers out of international markets, while the rouble has shed over 50% of its value against the US dollar since mid-2014.
The agency cited the falling rouble and a dive in revenue from oil exports, as well as a weakening financial system, for the move.
The downgrade will put more pressure on the country’s borrowing costs as many investment funds are banned from holding “speculative” grade bonds, which means Russia will have to offer higher returns to lure buyers when it wants to raise money.
The Russian government today condemned the agency’s decision, saying it had clearly been ordered by the US, according to state news agency RIA Novosti.
“I personally have no doubt that this was done not even on the prompting but on direct orders from Washington,” Deputy Foreign Minister Vasily Nebenzya was quoted as saying.
Russian woes
The Russian economy has been forecast to shrink up to 5% this year as the country’s financial woes deepen.
Its central bank hiked interest rates a massive 6.5% – from 10.5% to 17% – last month in a bid to stop the currency’s slide, which was leading to rampant inflation in prices.
Russian Finance Minister Anton Siluanov today announced the government was launching an anti-crisis plan to freeze spending and return the budget to surplus as early as 2017.
But former prime minister Mikhail Kasyanov told AP the rating cut was a reflection of how Western leaders viewed Russia’s economic prospects and president Vladimir Putin.
“Not a single Western country, barring a few politicians who are on their way out, have any trust in Putin,” he said.
With AFP and AP
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