EM Europe and CIS: Select Country Risk Ratings

Armenia (ARM)

Overall risk in Armenia remains medium-high, following failed coup attempts and shifting foreign policies. Prime Minister Nikol Pashinyan and his government have been at the center of recent coup attempts, after a well-known archbishop had been found guilty of calling for a regime change, alongside many other prominent clerics attempting to incite violent coups against the current government. Discontent towards the current government remains high, with the current party in power being once again led by President Pashinyan in the upcoming June 2026 election. Strong Armenia appears to be the largest opposition force to the ruling Civil Contract Party, which is led by Armenian-Russian billionaire Samvel Karapetyan, who has been accused of calling upon the public to overthrow the current government. Political violence is assessed at a high rating, taking into consideration the U.S.-brokered peace declaration in August last year, aiming to end nearly 40 years of hostility with Azerbaijan. Since the proposal, Azerbaijan has released Armenian prisoners captured during the war, exported its first shipment of gasoline into Armenia in more than three decades, and begun developing plans for the integration of both countries’ energy systems enabling cross-border electricity trade. Relations with Russia are experiencing a historic downturn however, following Russia’s concern that Armenia is turning to Western security alternatives and being drawn into what the Kremlin describes as the European Union’s ‘anti- Russian orbit’. Therefore, legal & regulatory risk and political interference are both unchanged at medium.

The IMF’s GDP growth forecast of 5.3% in 2026 and 5.5% in 2027. In the light of this, the IMF had reached a staff level agreement on the first review under a 3-year Stand-By Agreement in April 2026. The IMF agreement aims to maintain macroeconomic stability, support sustainable growth and advance the government’s reform agenda. Inflationary pressures are expected to remain elevated in the short term on the back of increasing oil prices, with an IMF forecast of 3.6% in 2026 and 3.4% in 2027. The Central Bank of Armenia has shown caution in its May 2026 Monetary Policy decision, leaving the policy rate unchanged at 6.5% alongside a weakening demand environment. The risk of doing business remains medium-low. On the other hand, sovereign non-payment risk has been upgraded to medium and exchange transfer is rated medium-high, with forecasts that indicate government debt to GDP is set to marginally rise to 50.6% in 2026 and 51.2% in 2027.

Belarus (BLR)

Belarus’ overall risk score is high. The political violence and political interference risks remain medium-high, while legal and regulatory risk is at very high rating due to concerns regarding allegedly centralized and authoritarian political landscape. Legal proceedings continue to be initiated against researchers, politicians and journalists due to ongoing political oppression. (Note: In March 2026, the Office of the Prosecutor of the International Criminal Court (ICC) formally opened an investigation into potential crimes against humanity committed by the Belarusian government against its citizens). Linked with this, the risk of doing business, and inability of government to provide stimulus remain at medium-high level while exchange transfers risks surged from medium-high to high risk category in this rating period. The country remains closely connected to Russia economically, politically and militarily relying heavily on Russian logistics and subsidized energy. Due to Russian influence, the Belarussian economy continues to be negatively impacted by the Ukraine-Russia war, the slowing Russian economy and sanctions. Supply chain disruption increased from medium-high to high due to the ongoing war in Ukraine and worsened relations with the EU and neighboring countries hampering foreign investments and economic confidence. Despite annual inflation rate remained unchanged at 5.4% in April 2026, inflationary pressures such as high state spending, loose monetary conditions, the adverse global impacts of the Iran war and rising import costs channeled through Russia dominate the economic outlook. Price and wage volatility remain strong, which can be attributed to international sanctions. Despite the National Bank of the Republic of Belarus (NBRB) is trying to reduce dollarization, for instance by increasing banks' mandatory reserves of foreign currency, low confidence in the Belarusian ruble, failures in financial regulation and supervision, and high level of political risk continue to impede such efforts leaving the sovereign non-payment risk rating at medium level. In this rating period, the inability of the government to provide stimulus remain high demonstrating weakening fiscal stance due to sanctions and adverse geopolitical events.

Kazakhstan (KAZ)

Kazakhstan’s overall risk score remains medium-high. The political interference and legal and regulatory risk levels are at medium-high. The country continues to be an autocratic state with elevated unemployment and corruption. President Tokayev remains powerful despite some concerns on the rule of law and women’s empowerment. International watchdog recently reported deep-rooted administrative hurdles and political corruption remain persistent challenges. Geopolitical uncertainties, sanctions over Russia economy and Ukraine war cause the risk of doing business and supply chain disruption risk to remain at medium level in Kazakhstan in this rating period. Even though the country is appearing to distance itself from Russia after the Ukraine conflict, Kazakhstan’s continued trade and FDI interdependence to Russia means the economy is still partly exposed to domestic movements in Russia. The underlying economy momentum is good, as the government tries to maintain growth momentum and fight against the elevated inflation. Kazakhstan's economy expanded by 3.0% y/y in Q1 fueled by growing construction, transport and trade sectors. The annual inflation rate slowed to 10.6% in April 2026 from 11% in March, marking its lowest reading since March 2025. The government is trying to fight against corruption and money laundering as it approved a comprehensive set of measures late 2025/early 2026 aimed at reducing the risks of money laundering, terrorist financing, and the proliferation of weapons of mass destruction. Despite high corruption, political concerns, and adverse global developments, the banking sector vulnerability is at medium-low level while the banking sector has systemic deficiencies that ensure poor scores for corruption and state intervention, financial regulation and supervision. Tied with this, the exchange transfer risk is at medium high. Sovereign non-payment risk remains at medium considering a fairly low public debt/GDP ratio (around 24% of GDP). While this ratio has ticked up slightly from previous years due to heightened domestic spending and quasi-fiscal operations, the state's sovereign risk is fundamentally mitigated by substantial net-creditor buffers, including liquid foreign exchange reserves and the extensive assets of the National Fund.

Russia (RUS)

Russia’s overall risk rating remains medium-high when compared to the previous risk analysis period. The war in Ukraine continues to be the primary determinant of Russia's political and economic trajectory. Political Violence remains at a very high rating. With the State Duma elections scheduled for September, various outlets allege that administrative pressures have maxed out against minor opposition parties. Political Interference remains high and the legal & regulatory risk stands at very high as the Kremlin allegedly enforces strict control over domestic media and suppress political opposition as aggressive blockades on private VPNs are implemented, and state-backed messaging apps are pushed for. The Russian economic landscape is mixed: Inflationary pressures are subsiding, while economic momentum has slowed with GDP growth turning negative in Q1. The Risk of Doing Business remains at a medium level hampered by a labour shortage and a weak investment climate while the Sovereign Non-Payment Risk is at medium level as the war in Ukraine continues to cause a domestic strain creating an increasing financial burden given high military spending and fiscal support. Exchange Transfer Risk is at medium, but heightened transfer and convertibility risks persist due to the widening secondary sanctions on international payment gateways. Russia’s ranking in the corruption perceptions index has further deteriorated in Q1, and the legal environment remains volatile as sanctions, supply side constraints, and price pressures continue to hamper foreign investments and economic confidence. The inability of the government to provide a stimulus generates a medium level risk, reflecting a budget deficit. (Note: In the first four months of 2026, Russia’s budget deficit soared to USD 78.4 billion—already exceeding 150% of the government's planned deficit for 2026). Banking sector vulnerability is medium-low as banks remain profitable and supported by the state, though they face rising non-performing loans and high borrowing costs for the private sector. The war in Ukraine remains the central vulnerability shaping the Russia’s outlook.

Serbia (SRB)

Serbia, located in the Balkans, has maintained an overall country risk of medium, despite anti-government protests sweeping across Serbia since the collapse of a railway station canopy which killed 16 people in December 2024. The President, Aleksander Vucic, has been accused of ongoing corruption, restricting the freedom of media and supposedly having ties with crime against political opponents. The Serbian Progressive Part (SNS) and President Vucic had strengthened their position following the party’s retain of power in the 2023 snap elections, but now protestors demand his tenure is cut short with an early parliamentary election, ahead of the planned date of December 2027. Political violence and political interference both remain medium, as President Vucic invited representatives of other political parties in efforts to resolve such a deepening crisis. In terms of Balkan relations, in particular with Kosovo, remain tense due an undissolved dispute following Kosovo’s unilateral declaration of independence from Serbia in 2008. In terms of international relations, Serbia is aiming to gain EU accession, while balancing strong and close ties with both China and Russia. Russia continues to hold ownership of Serbia’s NIS oil company following a further 60- day U.S. sanctions waiver issued in April 2026, which allows Serbia’s only oil refinery to keep importing crude oil until Russia’s Gazprom completes the sale of its majority stake to Hungary’s MOL. Legal & regulatory risk remains medium-high, as Serbia’s energy minister has expressed the country’s dissatisfaction with Hungary’s proposed purchase of its sole refinery. According to the IMF’s April 2026 economic outlook, GDP growth is expected to remain resilient, with a forecast of 2.8% in 2026 and rising to 3.5% in 2027, despite current headwinds stemming from the ongoing Middle Eastern conflict. Supported by the manufacturing sector, investment in both energy and infrastructure, as well as a recovering agricultural sector, has provided Serbia with a strong economic outlook despite geopolitical uncertainty. Inflation is to exceed previous expectations following the IMF’s forecast of 5.2% in 2026 and 4.9% in 2027, but may rise further depending on the length of the Iran conflict and global prices of primary commodities. In both March and April meetings, the central bank has taken a cautious approach by maintaining its 5.75% policy rate alongside the government adopting a ban on exports of petroleum products, reduction of excise duties on fuel as well as the release of strategic oil reserves. Sovereign non-payment risk remains medium, while exchange transfer lies at medium low. Government debt to GDP is expected to remain sustainable at 42.6% in 2026 and 43% in 2027, supported by Serbia’s high FX reserves.

Turkiye (TUR)

Turkiye’s overall risk level is high. Political violence and interference remain at a very high and medium-high level, respectively. Following the judicial mandate seeking a 2,400-year sentence for Istanbul mayor and presidential candidate of the opposition Ekrem Imamoglu, political opposition has been allegedly stifled. This crackdown intensified in H1 2026 as the government expanded its use of state-appointed trustees to seize control of several major metropolitan municipalities and some media outlets. Legal & Regulatory Risk remains at a medium-high level as the judiciary is alleged to be increasingly used as a tool for political neutralization. Linked with this, doing business remains at a medium risk level due to concerns over domestic politics. Although political tensions persist, the Turkish economy is showing subtle signs of progress. To illustrate it, Sovereign Non-Payment Risk and Fiscal Stimulus Inability have stabilized at a medium level reflecting a disciplined fiscal consolidation and the successful rollover of external syndications by Turkish banks. Banking sector vulnerability remains medium-low as the banking system has proven resilient post-FATF grey list removal, though high private-sector indebtedness (particularly in the energy and construction sectors) remains a latent credit risk. Elsewhere, the tight-for-longer monetary stance adopted is beginning to yield marginal results. Despite this, inflation continues to be the core economic problem, hitting 32.4% y/y as of April.  Sticky inflation and increases in energy costs continue to tilt risks to the upside while the investment environment remains fragile. (Note: In mid-May, the Central Bank of the Republic of Turkiye (CBRT) sharply raised the end-of-year 2026 inflation target from 16% to 24% due to inflationary pressures). Supply chain disruptions persist at an elevated level, driven in part by regional conflicts and disputes. Turkiye’s geographical proximity to the ongoing conflicts in Ukraine, in the Middle East and Iran continues to inflate logistics costs and disrupt Black Sea trade routes. While Turkiye maintains its role as a regional energy hub, it remains very vulnerable to external commodity shocks and shifts in global investor sentiment.

Turkmenistan (TKM)

Overall risk in the highly isolated country of Turkmenistan continues to be considered as high. The Central Asian region operates under a dual-leadership system in which President Serdar Berdimuhamedow serves as head of state, while his father, former president Gurbanguly Berdimuhamedow, holds his position as the Chairman of the People’s Council where real political power is understood to be concentrated. Political interference and legal & regulatory risk are both interpreted to be very high, reflecting the government’s continued tight control over the country’s political landscape, including media supervision and the silencing of the civil society. On the international level, Turkmenistan have maintained and is strengthening its political and economic ties with China. China, being one of Turkmenistan’s most vital trading partner, had agreed a deal to expand Turkmenistan’s Galkynysh gas field to its fourth stage, expanding its ability to process additional levels of gas along with new production wells. Additionally, in efforts to diversify its export markets, the Central Asian country is exploring its opportunity to complete a partnership agreement with the EU. Political violence has been re-affirmed with a medium-high rating, calling for a diplomatic solution to the conflict in the nearby Middle-East. Turkmenistan maintains a strict neutrality and has maneuvered around its strict visa policy to enable Russian citizens to leave Iran via Turkmenistan’s borders.

In terms of the region’s economy, the IMF has projected a 2.6% GDP growth rate in 2026 and a 2% rate in 2027. Turkmenistan’s hydrocarbon sector continues its role as the country’s key economic driver, with the world’s fourth largest gas reserves. The IMF expect inflation to rise to 3.9% in 2026 and 4.7% in 2027, driven by ongoing price increases in key imported goods from the nearby Iran and sharp increases in global energy prices. Iran is a major supplier of core consumer goods, including construction materials and food imports, with the flow of such imports declining due to the ongoing conflict in the Middle-East. Therefore, the risk of doing business has maintained its very-high rating. In contrast, Turkmenistan’s expected government debt picture is to remain exceptionally stable, projected at a 3.7% of GDP in 2026 and 2027, with the small amount of outstanding debt held primarily by domestic creditors. Sovereign non-payment risk remains medium, while exchange transfer is unchanged at high, as strict state imposed capital controls limit access to foreign currency.

Ukraine (UKR)

Ukraine’s overall risk remains high mainly due to the ongoing war and a very high risk in Political Violence. As of May 2026, martial law has been extended for the 19th time, running until August 2, 2026. This continued suspension of the democratic cycle—the presidential election originally due in 2024 remains on hold—has become a point of friction. Despite the political opposition remains broadly aligned on the war effort, political interference has escalated to a medium-high level. The political and economic outlooks remain exceptionally uncertain due to human and economic damage, coupled with labour shortages and Russia’s continued attacks on Ukrainian energy supply and infrastructure. Logistical and manufacturing problems linked with supply chain disruptions continue to slow economic activity, which has caused the risk of doing business to stand at medium-level in this rating period. Banking sector vulnerability remains at a medium-low level as the banking system has stayed partly liquid and profitable, supported by international grants and the National Bank of Ukraine's (NBU) stabilizing measures. The Ukrainian economy is struggling so far in 2026 due to significant constraints. The annual inflation rate in Ukraine rose to 8.6% in April of 2026 from 7.9% in the previous month, the highest in five months, due to higher food and transportation prices while war-related energy disruptions continue to pose significant upside risks. The economy of Ukraine shrank by 0.5% y/y in Q1, which marked the first contraction since Q1 2023, partly due to shortage of domestic labor driven by mobilization needs and brain drain overseas. Because of surging public debt, the government’s capacity to implement economic stimulus remains heavily restricted while sovereign non-payment and exchange transfer limitations continue to threaten the economic outlook. On the war front, a comprehensive peace settlement acceptable to all sides remains unlikely in 2026 as Russia maintains its initial hardline demands, Washington's primary focus has shifted toward the war in Iran while Ukraine would have to make territorial concessions and abandon its NATO ambitions. A brokered settlement would only mark the beginning of a decades-long rebuilding process for Ukraine. The war will continue to heavily overshadow Ukraine’s political and economic trajectories until a lasting deal is secured.

Uzbekistan (UZB)

Uzbekistan has maintained its overall country risk rating of medium-high. President Shavkat Mirziyoyev has held office since 2016, securing yet another seven- year term in his 2023 re-election alongside the Liberal Democratic Party. Constitutional amendments reset the President’s term count, enabling him to potentially remain in office until 2030 or even beyond. Political interference and political violence continue to be assessed at a medium-high risk rating. Even as the political system remains tightly controlled in the former Soviet republic, economic reform has become a top priority under President Miriyoyev, helping explain Uzbekistan’s recent tapping of global capital markets. In April 2026, the Uzbek government announced plans to sell a 30% stake in its National Investment Fund (UzNIF), with initial public offerings made on the London and Tashkent stock exchanges in May 2026. Uzbekistan is also improving its efforts to diversify its foreign policy. Early this year, an agreement regarding Uzbekistan’s critical minerals was signed with U.S. President Trump. Uzbekistan is taking a balanced approach to maximize its opportunities with Western partners, while not cutting historical but strategic ties with both China and Russia.

 In terms of the Uzbek economy, the IMF have expressed that Uzbekistan’s outlook still remains favorable following strong growth in 2025. GDP growth is forecast at 6.5% in 2026 and 5.9% in 2027 supported by ongoing reforms, continued investment and high gold prices. In addition to these particular stimulants, uranium production has boosted to approximately 7,000 metric tons with further plans to develop four new mines this year. Inflation pressures, however, are expected to remain. The central bank’s 5% target in 2026 appears unlikely, given that inflation is forecast to reach 7% this year. The central bank maintained its tight monetary stance, keeping its policy rate unchanged at 14% in its April 2026 meeting, to help reach its inflation target by 2027. Therefore, the risk of doing business is considered to be medium-high, while the government’s inability to provide stimulus is assessed at a medium rating. Lastly, sovereign non-payment risk remains medium alongside an improved exchange transfer rating of medium, as the country’s government debt picture seems favorable and within manageable limits. Government debt to GDP is projected to fall slowly to 27.5% in 2026 and 27% in 2027, with a majority being external debt dominated in foreign currencies.

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