Moody's lowers Belarus' credit ratings as sanctions bite

Moody's announced Friday it lowered Belarus' credit ratings to 'C' from 'Ca' as sanctions bite the country amid its involvements in Russia's war on Ukraine.

The rating agency said in a statement "sanctions are likely to cause a long-lasting damage to the economy and public finances, as support from Russia would only partially offset their impact, leading to very high risk of default on current and future debt issuances."

"Belarus' constrained capacity to service part of its foreign currency-denominated external debt amid the tightened sanctions environment in response to its support for Russia's invasion of Ukraine is likely to persist," it added.

Moody's noted that it changed Belarus' rating outlook to stable from negative.

The agency said the stable rating outlook indicates that Belarus' credit profile is "unlikely to improve materially unless sanctions are lifted."

Moody's said Belarus' support of Russia, since the beginning of the war on Ukraine, has led to sanctions imposed by the EU and the U.S., which targeted its key exports, such as steel and mineral fuel, its financial sector, and access of some banks to the financial system SWIFT.

"These restrictions are effectively impeding Belarus' access to Western financial markets," the agency said. "There is a high risk that further sectoral sanctions will be imposed, in particular if Belarus' involvement in the Russia-Ukraine war were to increase or in case of a further escalation of the war."

Noting that Belarus' real GDP contracted by 4.7% in 2022, recording the worst recession in past two decades, Moody's said it expects real GDP to expand 0.3% in 2023 as the economy gradually adjusts to the sanctions.