Countries across the Commonwealth of Independent States (CIS)1 have made tangible progress implementing reforms over recent years, bolstering government effectiveness to varying degrees. However, for some sovereigns, the momentum for policy action is fading as economic and external challenges have ebbed, ONA reports quoting report provided by Moody’s.
Moreover, governance as reflected in control of corruption and the rule of law generally remains weak, constraining economic potential. In this report, we assess the credit impact of implemented and planned reforms, and prospects for further progress in the region. » CIS institutions remain relatively weak, even as transformation continues Most sovereigns in the CIS demonstrate weaker institutional quality than income levels suggest. While the region's institutional strength has largely caught up with rated sub-Saharan Africa, it continues to lag Asia Pacific, and Middle East and North Africa (MENA). » Reform momentum fading for a number of sovereigns Following relatively broadbased gains in government effectiveness in recent years across the region, we expect that reforms will continue in Armenia (Ba3 stable) and Georgia (Ba2 stable), where political support for reform remains, and in Belarus (B3 stable) and Tajikistan (B3 negative), where the economic cost of no reform may be large. Russia's (Baa3 stable) recent gains in government effectiveness appear entrenched but unlikely to extend materially. Elsewhere, reforms are encountering implementation challenges in Uzbekistan (B1 stable) and Ukraine (Caa1 stable), political hurdles in Kyrgyz Republic (B2 stable) and Moldova (B3 stable), and reduced urgency as economies recover from the 2014-16 shock that spurred earlier action in Kazakhstan (Baa3 positive) and Azerbaijan (Ba2 stable). »
Even where reforms have produced gains in government effectiveness, reforms in other areas are much less tangible. In Ukraine and Moldova, conditions are in place for some strengthening in very weak governance standards, although vested interest could yet bring the process to a halt.