Russian Economy Downgraded By Ratings Agency, Default Predicted

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The U.S.-based credit rating agency called Fitch Ratings has now pinned Russia at “C,” meaning “near default” status, amid the intense volley of economic counter-measures that have been rolled out by governments worldwide in response to President Vladimir Putin’s invasion of Ukraine. Fitch Ratings now estimates that a Russian government default is “imminent,” “cautioning investors that it was careening toward an inability to make good on its debts,” as summarized by The Washington Post, outlining yet another marker of the country’s increasing economic isolation. The value of Russian currency has plummeted, and the Russian central bank’s access to its reserves of foreign currency has been sharply restricted amid the campaign to economically hold Russia accountable. Current circumstances threaten to strip Russian officials of foreign currencies with which to pay debts, which couldn’t be as effectively covered by Russia’s own currency.

Even Russia’s supply of its own money stands to be seriously limited by moves such as the decision by the United States to ban Russian energy imports. Outside of the U.S., other countries are planning to phase out their reliance on energy from Russia, setting up further economic draw-downs for the country. Fitch describes its “C” rating as for situations in which a “default or default-like process has begun, or the issuer is in standstill, or for a closed funding vehicle, payment capacity is irrevocably impaired.” As for Russia, the company added that the “further ratcheting up of sanctions… and proposals that could limit trade in energy increase the probability of a policy response by Russia that includes at least selective nonpayment of its sovereign debt obligations.” Russia has become the most-sanctioned country in the world, surpassing even North Korea. Putin put out a decree earlier this month that the Russian government could force certain debts to be repaid with Russian currency, although that move does not appear likely to stave off the apparent inevitable.

The Putin regime is standing by its military aggression against the people of Ukraine, even amid these serious economic consequences for the authoritarian leader’s country, where thousands have been arrested in recent anti-war demonstrations — and where authorities recently implemented new legal provisions allowing for prison sentences of up to 15 years for certain instances of spreading so-called fake news related to the war. Atrocities against the people of Ukraine are continuing to unfold; this Wednesday, Putin’s military personnel carried out what Ukrainian President Volodymyr Zelenskyy characterized as a “Direct strike of Russian troops at the maternity hospital” in Mariupol, where residents totaling in the range of hundreds of thousands have been struggling under repeated Russian attacks and loss of access to basic utilities like running water. Deputy mayor of Mariupol Sergiy Orlov said on Wednesday that more than 1,100 people had already died in his city alone.