MOSCOW (MRC) -- Fitch Ratings has affirmed Russia's Long-term foreign and local currency Issuer Default Ratings (IDR) at 'BBB-' with a Negative Outlook, as per the agent's press release.
The senior foreign currency and local currency unsecured debt ratings have been affirmed at 'BBB-'. The Country Ceiling has been affirmed at 'BBB-' and the Short-term rating at 'F3'.
Russia's 'BBB-' ratings balance a strong sovereign balance sheet and low sovereign financing needs against structural weaknesses (commodity dependence and governance risks), high growth volatility and geopolitical tensions.
Fitch forecasts Russia's economy will contract in 2015 by 3.5% after being hit by multiple shocks in 2014: a fall in oil prices, depreciation of the rouble and the imposition of sanctions by the US and EU in response to the conflict in Ukraine. Having contracted by 2.2% in 1Q15, the economy will contract further in 2Q15. Fitch expects real GDP to grow by 1% in 2016. Russia has recovered some competitiveness, but the medium-term growth outlook is the weakest of major emerging markets, at 1%-2%.
As MRC wrote before, in March 2015, US oil and gas major ExxonMobil asked the Russian government to reimburse taxes worth "several billion roubles" it says it overpaid on a project in the far east of Russia. The newspaper, citing unnamed sources, said ExxonMobil believes it overpaid profit taxes on its Sakhalin-1 oil and gas project. Russia reduced the profit tax in 2009 to 20% but ExxonMobil continued to pay at the earlier level of 35% after the project broke even in 2008, it said. ExxonMobil owns 30% in Sakhalin-1.
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