March 03, 2008 | Cbonds
|Jonathan Schiffer, VP-Senior Credit Officer, at Moody's Investors Service released some quotes following the election of Mr. Dmitriy Medvedev to President of Russia: |
- The chances are great that President Medvedev will continue the basic approaches that have characterized President Putin's recent initiatives.
Politics will remain highly centralized.
- Budgetary policy will by guided by the newly enshrined (rolling) 3 year budget, which will gradually tighten to assist a main policy goal, the reduction of the rate of inflation.
- President Medvedev has suggested he will also lower VAT taxes and introduce fiscal incentives for greater research, development, and investment from quasi-state and private sector corporations in the hopes of modernizing and diversifying the Russian economy.
- To support and speed commodity turnover, President Medvedev's administration will probably invest heavily in infrastructure - transport, energy, telecommunications.
- To insure funding for private sector expansion, banking supervision will be tightened, a fund in preparation for any financial crisis in the banking system will be established, and there will probably be an attempt to develop domestic capital markets via reform of Russia's poorly conceived pension system.
- Manifestations of continuity of approach to economic policy plus the types of initiatives noted above would place upward pressure on the rating. When and as the Russian Federation diversifies its economy away from (and lowers its budget revenue dependence upon) raw material output and export and when and as the economy becomes more efficient in its utilization of labor and capital, Russia's creditworthiness will improve further still.
Moody's currently rates the foreign and local currency bonds of the government of the Russian Federation at Baa2.