Fitch affirms restricted default rating for Belarus

October 29, BPN. Fitch Ratings affirmed Belarus’ Long-Term-Foreign-Currency Issuer Default Rating (IDR) at “RD” (restricted default).

It linked the decision to the government’s inability to fulfill its obligations on Eurobonds over payments of U.S. dollar Eurobonds in Belarusian rubels in late June. 

Fitch described Belarus’ economic outlook as bleak and predicted that economy would continue to contract in 2023 and 2024.

“Costs of trade reorientation and falling export prices will push the current account into deficit,” Fitch analysts said. They also expect the current account moving from a surplus of 2.9 percent of GDP in 2022 to a deficit of 1.4 percent in 2024.

Fitch believes that close relations with Russia and the authorities’ support of Russia’s war in Ukraine have significantly limited Belarus’ ability to maneuver between Russia and the West. “There is no evidence of splits within the Belarussian political elite over support for Russia,” it added.

On September 14, Fitch downgraded four Belarus’ Eurobonds to “D” (default) following the expiry of the grace period on the first Eurobond that was not fulfilled under the original terms. Belarusian finance ministry called this assessment “biased.” 

Fitch, along with Standard & Poor’s (S&P) and Moody’s, is one of the so-called “Big Three” international rating agencies.