Fitch confirms Ukraine’s B- rating and stable outlook

Fitch Ratings reported on Oct. 26 it has affirmed Ukraine’s
long-term foreign currency issuer default rating at “B-“, as well the rating’s
stable outlook. Commenting on the action, Fitch said that that ratings “balance
weak external liquidity, high external financing needs driven by sovereign
external debt …, institutional constraints and geopolitical and political
risks, against improved policy credibility and consistency, improving
macroeconomic stability, declining government debt and a track record of
bilateral and multilateral support.” 

The agency stressed the IMF’s key role in enabling
Ukraine’s access to external financing, stating that delays or a collapse of
the new IMF loan program could trigger its negative rating action. It warned
that the 2019 election season in Ukraine creates “risks for smooth progress”
under the agreed-upon IMF program. At the same time, Ukraine’s rising external
liquidity and improved economic performance are factors that could trigger an
upward rating revision.

Alexander Paraschiy: The biggest
risk for Ukraine’s finances currently is inability to reach an agreement with
the IMF on the new loan program. Given that Ukraine has not yet fulfilled its
commitments for the next IMF loan tranche, we see Fitch’s “stable
outlook” as an encouragement allowance for Ukraine. At the same time,
fundamentally, we agree that Ukraine deserves such encouragement, and so far we
expect the country will do all its best to secure the next IMF loan tranche as
soon as possible.