International rating agency Standard & Poor's downgraded Greece's credit rating by two points — from "BB-" to "B." Experts predict a further downgrade with increasing of default risk. Thus, Greece's credit rating has become equal to that of Belarus — the economies of these two countries are considered the weakest in Europe.
As Telegraf previously reported, service credit rating Standard & Poor’s lowered its long-term credit rating of Belarus on liabilities in foreign currency from «B +» to «B,» while long term rating for liabilities in national currency — from ‘BB’ to ‘B +’ in March 2011. The outlook on long-term ratings is called «negative,» while transfer and convertibility risk for the Belarusian non-sovereign borrowers is assessed with «B.»
The rating of the expected level of debt recovery after the default, previously assigned to senior unsecured obligations of Belarus, remains at «4» level. This corresponds to the expectations of Standard & Poor’s — 30-50% return of the debt in case of default on the republic’s commercial debt.
According to Standard & Poor’s experts, the Belarusian economic model could threaten the current political regime of the country. The experts note in their latest report that Belarus could face stagnation and crisis of the political system without structural reforms. The report also notes that Belarus has reduced «the ability of governments to support the national economy and ensure sustainable financing of public sector spending.»
Credit analyst at Standard & Poor’s, Sergei Voronenko, explained that in light of the high deficit on current account, the rapid credit accumulation by the state organizations has created a heavy burden on the domestic banking resources. «If the government is not able to refinance its external debt obligations, those organizations may have difficulty in servicing and repayment of debts, which could lead to a sharp increase in the volume of bad loans,» said Sergei Voronenko.
In Standard & Poor’s also noted that due to the pressure on international reserves of Belarus, resources of banks to repay debt are also reduced. International experts believe that the Belarusian ruble exchange rate in 2011 will go down again without a significant adjustment to monetary and fiscal policies. «However, operating environment can be stabilized over the next years if the government is able to reduce the existing imbalances in the economy,» the experts of the agency emphasized in their latest report.
Based on materials of Bloomberg.com
