By Alexander Kolyandr And Josh Beckerman 

Russia's Finance Ministry Finance Minister Anton Siluanov said Moody's Investors Service's downgrade of the country's debt rating to junk status was primarily driven by political factors.

Earlier, Moody's downgraded Russia's sovereign debt rating to junk status, citing the conflict in Ukraine, low oil prices and the weakened ruble.

The rating was lowered to Ba1 from Baa 3.

Investors unloaded some rubles on the news of the downgrade, lifting the dollar to a 0.6% gain against the Russian currency during the North American session.

In an e-mailed statement, Mr. Siluanov said Moody's assessment is "not only overly negative, but also based on an extremely pessimistic outlook, which has no analogues today."

"The agency has ignored all the information provided to it about the current state of the Russian economy, its budgetary and financial policy, which has been provided to it," the minister said, adding that Moody's based its decision primarily "on political factors."

Moody's believes "the government's financial strength will diminish materially as a result of fiscal pressures and the continued erosion of" Russia's foreign exchange reserves due to capital outflows and restricted access to international capital markets.

Moody's also downgraded Russia in January, signaling a possible further downgrade.

The rating firm said at the time that it expected Russia's real gross domestic product to fall around 5.5% in 2015 and 3% in 2016, bringing real growth over the 10-year period through 2018 to "virtually zero."

Moody's continues to maintain a negative outlook for Russia.

The minister harshly criticized the decision and noted that the agency based its outlook on the assumption of a $400 billion dollar capital outflow in 2015 and 2016 as well as an 8.5% economy contraction over the same period.

The Russian government expects its economy to contract 3% this year, and while economists at private banks expect the fall to be deeper, both the Kremlin and independent analysts expect the economy to get on track in 2016.

"We reacted with surprise to their assessment," one government official said. "We simply don't have so much money to leave the country."

The official, who declined to be named, said both the government and an international bank which consults it "were flabbergasted" not only by the downgrade, but rather by the figures presented.

Standard & Poor's cut the country's credit rating to junk in January, sending it below investment grade for the first time in more than a decade. Also in January, Fitch Ratings cut its rating to BBB-, the brink of junk.

According to an Interfax report, Russia's economy contracted 1.5% in January compared with the same period a year earlier.

Economic data published Wednesday showed Russia's economy moving further toward recession under the weight of Western sanctions and a sharp decline in the price for oil, its main source of hard currency.

Write to Alexander Kolyandr at Alexander.Kolyandr@wsj.com and Josh Beckerman at josh.beckerman@wsj.com

Corrections & Amplifications

Moody's said in January that it expected Russia's real gross domestic product to fall around 5.5% in 2015 and 3% in 2016. An earlier version of this story said the agency expected GDP to grow.

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