S&P Global Ratings raised its long-term local and foreign currency sovereign credit ratings on Belarus to B from B- with a stable outlook, citing the country's unexpectedly strong economic growth and its secured foreign financing.
The rating agency, which previously forecast no growth for Belarus, now projects the economy to expand 1.8% in 2017. According to official estimates, the economy grew 1.6% over the first eight months in year-over-year terms.
S&P said the normalization of Belarus' bilateral relations with Russia support headline growth. The gradual strengthening of trade partners' economic performance and firmer growth in the EU also create favorable conditions for Belarus.
The rating upgrade also reflected two eurobond issues amounting to a combined $1.4 billion, and a $700 million bilateral loan from Russia, which secure the majority of Belarus' financing needs for next year.
"We estimate that these resources should allow the government to meet its debt repayments in 2018," S&P said.
The ratings could be lowered if the government's refinancing plans come under threat, S&P warned, citing the possibility that Russia might withdraw political and economic support. The ratings could be upgraded if the government implements a credible reform program reducing external vulnerabilities and resolving weaknesses in the country's public enterprise and bank sectors.
S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.