Moody’s cuts Kyrgyzstan’s rating after gold mine nationalisation

Rating agency Moody’s cut Kyrgyzstan’s credit rating to B3 from B2, saying the authorities’ decision to nationalise the Central Asian nation’s largest gold mine last year indicated weak governance and investment climate deterioration.

The Bishkek government took over the Kumtor gold mine last May, which had been operated by Canada’s Centerra Gold, for allegedly posing danger to human lives or the environment. The company has denied all the allegations and started arbitration against Kyrgyzstan.

Moody’s said recent mining sector developments, including the Kumtor takeover, “partly reflect relatively weak institutions and governance and are likely to negatively affect long-term economic growth particularly through the deterrence of foreign investment”.

“Lower growth and undermined prospects for economic diversification will in turn negatively affect government revenue,” it said in a statement.

Centerra Gold said this month it was in talks with the Kyrgyzstan government for an out-of-court settlement.

(By Olzhas Auyezov; Editing by Jason Neely)