The stabilization of oil prices has eased the direct and indirect economic and fiscal pressures on the nine rated sovereigns in the Commonwealth of Independent States (CIS) region, Moody's Investors Service said in a report today, APA-Economics reports.
“Still, the region's overall credit outlook for 2017 is negative, driven by subdued economic recovery, external vulnerabilities in those countries with high foreign currency debt and the likelihood that political considerations will delay structural reforms that would bolster potential growth,” said the report.
In 2016, Moody's took negative rating actions for five CIS sovereigns after slumping oil prices weighed on the credit profiles of major oil and gas exporters and had knock-on negative effects for the economies of many other sovereigns in the region.
"CIS governments managed the oil-price shock with increasingly orthodox policies, such as floating exchange rates and tight fiscal and monetary policies. These have mitigated the effects of the collapse in oil prices, and positioned most CIS countries for a modest economic turnaround in 2017," said Kristin Lindow, a Moody's Senior Vice President and co-author of the report. "However, the macroeconomic outlook remains weak, and downside credit risks still dominate."
“All CIS sovereigns should grow slightly faster in 2017 than in 2016. Moody's forecasts median growth to rise to 2.0% in 2017 from 1.0% in 2016, and a further rise to 3.0% in 2018. Somewhat higher oil prices are likely to enable policymakers in oil-exporting countries to partially roll back fiscal and monetary policy tightening, and oil importers will benefit from a modest pickup in remittance inflows.
Geopolitical conflicts also will continue to weigh on the CIS economies, mainly because of the impact of Western sanctions on Russia and the conflict in eastern Ukraine but also due to the flare-up of aggression between Azerbaijan and Armenia. Of the nine CIS sovereigns rated by Moody's, only Belarus and Kazakhstan are not engaged in a military conflict or border dispute with a neighbour,” report said