Its central bank decided not to lower rates to spur economic activity, as other major central banks did MOSCOW: Russia’s unique policy response to the coronavirus pandemic will put pressure on the credit ratings of its banks, Moody’s forecast on Friday, while Standard & Poor’s said the banking system has adequate capital and liquidity buffers. Standard & Poor’s confirmed Russia’s sovereign rating at BBB- with a stable outlook, but said the economy is likely to contract by 0.8 percent this year. Russia has been hit by an oil price slump, a falling rouble and the coronavirus outbreak. President Vladimir Putin has proposed various measures to support families and businesses, including taxing interest on deposits of more than 1 million roubles ($12,812). Russia’s reaction differs to that of other states. Its central bank decided not to lower rates to spur economic activity, as other major central banks did. “Instead of providing financial help from reserves and raising new debt, the Russian state prefers to shuffle off the burden of anti-crisis measures onto business and households,” BCS Brokerage said. Moody’s said the move to tax interest on deposits, which Putin said would help allocate extra funds to fight the impact of the coronavirus outbreak, will affect 55.3 percent of the nominal amount of retail deposits, citing Russia’s state Deposit Insurance Agency data. “We expect that some depositors in this category may opt to reduce their deposits to avoid the tax, converting roubles to foreign currencies or investment instruments,” Moody’s said. Putin’s decree, which he announced on state TV on Wednesday and included a grace period on interest and principal payments to borrowers, raised concerns among households and in markets. Government officials sought to explain the details, with Finance Minister Anton Siluanov saying that new taxes will be only be imposed in 2022 and will be applied to interest earned on banks’ deposits and investment in stocks in 2021. New taxes will not be imposed on investments in Russian corporate bonds, Siluanov said. Moody’s said that if there is a prolonged economic slump, at least 10 percent of all retail borrowers in Russia would qualify for the grace period and banks would lose or receive late 5 percent of the sector’s total annual profits. “Putin’s initiatives put pressure on banks, a credit negative,” Moody’s, which rates Russia Baa3 with a stable outlook, said in a statement. The finance ministry has not yet disclosed the impact of Putin’s pledges for Russia’s budget, which is already under pressure from low oil prices. Alfa Bank estimates the tax on retail deposits may bring in around 100 billion roubles a year.