The plummeting ruble might just bankrupt Russia, the Financial Times reports. Standard and Poor’s has dropped the G8 member’s credit rating from BBB+ to the lowly BBB, warning that the country may have to spend all $200 billion in its sovereign wealth funds to recapitalize the banking system and cover fiscal deficits. The group expects Russia to run a deficit of 2.6% of GDP next year.
“There are a lot of layers of concern,” said S&P’s top credit analyst. “Russia has not operated a current account deficit since 1997, and that was less than 1% of GDP.” Investors have been unloading rubles since the war with Georgia, a process sped up by plummeting oil prices. Since August, Russia’s reserves have fallen by $128 billion.