02:50 GMT04 December 2020
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    Moody’s has placed Russia’s Ba1 government and issuer ratings on review for downgrade, the rating agency said in a statement.

    MOSCOW (Sputnik) – According to Moody’s, the review should be completed within two months.

    "During the review, Moody's will assess the extent of the impact of the further sharp fall in oil prices, which Moody's expects to remain low for several years, on Russia's economic performance and government balance sheet, including the government's deficit financing options, in the coming years," the Friday release says.

    Global oil prices fell from $115 to less than $30 per barrel between June 2014 and January 2016, hitting their lowest levels since 2003.

    "The structural shock to the oil market is weakening Russia's economy and its government balance sheet and therefore also its credit profile," Moody’s said on Friday, adding that it "sees risks that the government would become overly reliant on a weak currency to offset the lower oil prices or else resort to central bank financing, both of which would keep inflation at relatively high levels and threaten the recovery of the domestic banking system."

    In December, Moody’s changed the outlook for Russia’s Ba1 government bond rating from negative to stable. Then, the rating agency said that Russia’s external financial position would remain strong despite weak oil and gas prices.

    The Russian economy suffered a setback in 2014, as the ruble lost about half of its value against the dollar amid low global oil prices and Western economic sanctions imposed against Russia over the situation in Ukraine.

    In January, the Russian government unveiled an anti-crisis plan to stabilize and improve the country's economy by 2017.


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