Moscow will no longer consider the assessments when making foreign loan decisions, effectively easing requirements for countries to borrow
© Getty Images / Peter Dazeley
The Russian government will no longer base its foreign loan decisions on credit ratings compiled by Western agencies and the Organization for Economic Co-operation and Development (OECD). A corresponding decree was signed by Russian Prime Minister Mikhail Mishustin last week, and the document was later published on the government’s official portal.
Poor credit ratings have historically hindered many nations in securing loans. Under the previous regulations, in order to receive a loan from Moscow, foreign countries had to belong to credit risk groups with a score no lower than six (out of eight) according to the OECD’s classification, or with a long-term credit rating higher than B- (according to the Fitch and Standard & Poor’s rating systems), and higher than B3 (according to Moody’s). These provisions no longer apply, which means Russia will be able to provide loans to countries that don’t meet these requirements, according to the latest decree.
Russia also scrapped a rule that required countries wishing to borrow funds to have the average cost of sovereign credit default swaps in US dollars for a term of ten years over the previous three months over 800 basis points. Finally, the Russian government changed loan repayment requirements, allowing for payments in the “agreed-upon currency,” but naming payments in rubles the “correct” form of reimbursement.
Earlier this month, the World Bank reported that in 2022, a total of 37 states had outstanding debt to Russian creditors, amounting to $28.9 billion, a $2.3 billion (or 8.7%) increase from 2021. According to the financial organization, Belarus ($8.24 billion), Bangladesh ($5.86 billion), India ($3.75 billion), Egypt ($1.82 billion), and Vietnam ($1.39 billion) were among Russia’s largest debtors at the end of last year. Russia does not disclose specific data on the country’s debtor states, but based on estimates cited by RBK, in 2021, the country ranked fifth among the largest sovereign lenders to developing countries.
In July this year, Russia announced it had written off $23 billion worth of debts carried by African states. Speaking at the Russia-Africa summit in St. Petersburg, President Vladimir Putin said that the measure settled 90% of liabilities of African countries to Russia, with the exception of some minor financial obligations.
For more stories on economy & finance visit RT’s business section
