Azerbaijan and Kazakhstan are best placed among CIS countries to navigate the challenging macroeconomic conditions caused by oil price fall and economic situation in Russia, says Moody's Investors Service in its annual CIS Sovereign Outlook, published May 14.
Azerbaijan and Kazakhstan have large reserve buffers and are not involved in the conflict in Ukraine, Moody's said.
Countries in the Commonwealth of Independent States (CIS) will continue to be affected by oil price movements and Russian spillovers in 2015-2016.
Russia's recession continues to adversely affect the macroeconomic environment of other CIS countries, says Moody's.
"We expect that challenging conditions for CIS countries will continue to persist over the next 12 to 18 months," says Ernest Sergenti, an analyst at Moody's.
"Despite the recent recovery, oil prices remain at suppressed levels and continue to affect oil exporters,” he said. “Meanwhile, the outlook for net energy importers remains bleak as they rely heavily on Russia for remittances, trade and finance. Other challenges some countries face include exposure to the Ukraine crisis and weak banking systems."
Although the CIS region's three net energy exporters – Azerbaijan, Kazakhstan and Russia -- have low debt-to-GDP ratios and gross borrowing requirements, uncertainty around future oil prices and geopolitical concerns weigh on the credit quality of these countries, in Moody's view.
Within the CIS region, Moody's has a negative outlook on the ratings of four sovereigns (Armenia, Belarus, Russia, Ukraine) and a stable outlook on three (Azerbaijan, Kazakhstan and Moldova).
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