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S&P Says Russia's Sovereign Rating Vulnerable To Oil Price Swings

Standard & Poor's on Monday said a sustained decline in oil prices could damage the Russian economy and public finances and consequently lead to a cut the long-term sovereign rating on the Russian Federation.

"In a severe stress scenario, where a barrel of Urals oil drops to, and stays at, an average $60, we would expect the general government to post a deficit above 8% of GDP," S&P's credit analyst Kai Stukenbrock said.

"In that scenario, the long-term ratings on the Russian Federation could drop by up to three notches."

Oil prices have a huge impact on Russia's economy, affecting real and nominal GDP, trade, the exchange rate and above all public finances. A decline of $10 in oil prices will lead to a 1.4 percent of GDP decline in government revenues.

by RTT Staff Writer

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