YEREVAN, January 21. /ARKA/. The negative outlook for sovereign creditworthiness in the Commonwealth of Independent States (CIS) in 2020 reflects growing external risks and continued political uncertainty, Moody’s Investors Service said in a report on January 20.
It said although the crystallisation of these risks would likely constrain any further strengthening of fiscal metrics, enhanced monetary policy, fiscal frameworks and banking supervision could mitigate some of the impact.
“We expect growth to remain solid and fiscal metrics to strengthen in a number of CIS countries this year,” said Christian Fang, a Moody’s AVP-Analyst and the report’s co-author. “But outstanding external risks could challenge our baseline forecasts.”
While Moody’s forecasts that government debt burdens will generally decline or be stable over the next 12-18 months, they will remain higher than levels seen during the last regional shock in 2014-16.
Effective implementation of various reform agendas in the region will gradually raise resilience by increasing fiscal and policy buffers, promoting financial stability, and reducing reliance on external financing. That said, the benefits will be limited in the short term.
Political uncertainty will also weigh on the domestic economies and reform trajectory in the region.