BELARUS NEWS AND ANALYSIS

DATE:

22/08/2007

Moody's gives first rating to Belarus of 'B1'

NEW YORK, Aug 22 (Reuters) - Moody's Investors Service gave Belarus an issuer credit rating of 'B1' on Wednesday, citing some recent economic successes but also highlighted the risks of rising energy prices.

Moody's move follows by one day Standard & Poor's decision to rate the ex-Soviet state a 'B+' rating. Both ratings are four notches below investment grade with stable outlooks.

"The ratings reflect both the recent macroeconomic successes of Belarus and the likelihood that rapidly increasing energy prices from 2007 onward will occasion substantial restructuring of enterprises and may lead to a deterioration of some macroeconomic indicators," Moody's sovereign credit analyst Jonathan Schiffer said in a statement.

Schiffer noted that Belarus has some "world-class" enterprises that are channeling investment into fixed assets to cope with rising energy prices.

"Nevertheless, current account performance might prove vulnerable, and foreign currency revenues -- already low by international standards -- might not grow at the desired rate," he said.

In Minsk, the head of Belarus's central bank said the twin ratings would greatly improve the investment climate in the ex-Soviet state.

"Investment will now come at a greater pace and that is very important for the economy," Pyotr Prokopovich told the official BELTA news agency.

"We will soon receive credit ratings for all our enterprises, starting with the largest ones. In time, every enterprise in the country will have its own rating."

Belarus, an isolated nation of 10 million, has a Soviet-style economy, which had for years relied on cheap Russian energy to sustain rapid rates of economic growth.

But ministers have said they are prepared to proceed with selective privatisations and want to raise money on international markets.

Russia's gas monopoly Gazprom doubled gas prices for Belarus to $100 per 1,000 cubic meters from January this year, but allowed the country to pay only half the price in the first six months.

Source:

http://asia.news.yahoo.com/070822/3/36sk3.html