Credit rating costs Belarus several million dollars

Belarus last week received the first credit rating in history, with Standard & Poor’s ranking our economy as “B+”. Economists and ordinary folks are now trying to understand what this letter means for this country. Consensus is that “B+” rating is lower than the rating of the president but higher than the one of the opposition.

Credit rating is not a medal

Economist Leanid Zaika notes that the credit is not a medal, because there is simply no financial market or securities market in Belarus. All financial flows are quite simple and regulated from the top. One can say Belarus has been ranked at this position thanks to the administrative economy.

“Since we have no financial market, all the transactions are simple. Since their quantity is insignificant, we have a very simple and stable market…

In the Soviet Union, there was no financial crisis, either. The financial and economic system that Stalin had created was very stable. There were no defaults. Prime ministers were not sacked. They did not shed tears about the lost money, etc. That’s why the Stalin’s system could have been given even “AAA”, “ Zaika said.

No impact on Belarus’s population

Will the credit rating produce any influence on the population in this country?

With nearly $10 billion of own investment flows in Belarus, foreign investments account for only 0.6-0.7 percent. In the best years, this figure could reach 5 percent. What is 5 percent out of the total investment volume? Leanid Zaika says this figure is absolutely unnoticeable and has no significance for economy. Rather, it will just help the authorities feel better.

“This rating will allow the president, the prime minister, the finance minister and Central Bank chairman to feel better. Belarus was somewhat inferior economy, because it had no credit rating. That situation made our leaders feel uncomfortable. You just pay several million dollars and you get this rating.

What will happen? Nothing much. Several private banks will be given smaller interest rates for their loans, but the situation will not change in principal,” Dr Zaika maintains.

Among the former Soviet republics, Georgia is ranked as B+ (stable) the same as Belarus. Russia has BBB+ (higher than Belarus). Kazakhstan is BBB (stable and also higher than Belarus). Ukraine is ranked as BB- (a negative forecast). At the same time, in spite of the negative forecast, Ukraine enjoys a higher rating than Belarus.

Photo: telegraf.by