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Qabil Ashirov

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International credit rating agency Fitch Ratings announced the impact of the Russia-Ukraine war on the credit rating of emerging European countries.

The rating agency noted that the war has unprecedented impact on ratings in the region.

“One year after the conflict began, the share of Stable sovereign Outlooks in emerging Europe is at its lowest since late 2003, having fallen to just over 36% this month from 70% in end-February 2022,” the agency said.

According to the agency, the sovereign rating of seven countries in emerging Europe remains negative Outlook, as it was during the Covid-19 pandemic.

On North Macedonia (BB+) and Romania (BBB-), negative Outlooks formed before the war. However, negative Outlooks on the Czech Republic (AA-), Estonia (AA-), Hungary (BBB), and Slovakia (A) reflect risks from the energy crisis and fiscal policy caused by the war.

Besides that, the agency said that sovereigns in the Caucasus and Central Asia weathered 2022 remarkably well.

Capital and people influx from Russia, Ukraine, and Belarus to Georgia (BB) and Armenia (B+) increased macroeconomic, fiscal, and external performance.

In addition, high energy prices have strengthened the fiscal and external balance sheets of exporters such as Azerbaijan (BB+) and Turkmenistan (B+).

The agency revised Azerbaijan’s Outlook to Positive in October 2022, and Turkmenistan’s earlier this month.

“Our baseline expectation is that the war continues within its current parameters in 2023, and its geo-political implications, economic spillovers and associated policy responses will remain key drivers of emerging Europe sovereign creditworthiness,” the agency added.

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