NEW YORK: Russia is below investment grade as it was stated by US ratings agency Standard and Poor’s for the first time in a decade.
S&P gave Russia a rating of BB+, which puts it at the same level as Indonesia and Bulgaria.
This makes it harder for Russia to borrow money from investors. Russia’s economy is expected to contract by 4% to 5% this year.
“Russia’s monetary-policy flexibility has become more limited and its economic growth prospects have weakened,” S&P said in a statement.
“We… see a heightened risk that external and fiscal buffers will deteriorate due to rising external pressures and increased government support to the economy,” it added.
Russia’s economy has been in free fall since the middle of last year, when plummeting oil prices cut the income for its oil industry and the unrest in Ukraine led to international sanctions.
Oil prices have plunged over 50% since the middle of last year, to $45 a barrel, which has been particularly difficult for Russia, which expected prices to stay near $100 per barrel in 2015.
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