The default is not expected. Fitch has improved the sovereign rating of Ukraine

The default is not expected. Fitch has improved the sovereign rating of Ukraine

The rating was upgraded from CCC to b – with a stable Outlook.

Fitch Ratings has improved the long-term Issuer default rating of Ukraine in foreign and national currency from CCC (possible default) to b- (substantially insufficient creditworthiness) with a stable Outlook. This is stated in a press release on the Agency’s website.

It is noted that the improvement of the rating was influenced by provided financial assistance to Ukraine – IMF tranches and other resulting in increased reserves in foreign currency and a more flexible exchange rate. However it is noted that liquidity remains solid much lower estimates of V.

The current account deficit, the Agency expects to increase to 2.5% of GDP in 2016 and continue to rise to 3% in 2018. But, with the help of external financing and sound domestic policies, is expected to increase reserves.

Inflation, specified in the message, too high of 14.9% in 2016. Thus even when you run the NBU’s policy aimed at reducing inflation to 5% in 2019, still under the rating value of 4.6% Ukraine does not make it.

Political risks in Ukraine, the Agency said, remain at a very high level, but in the short term appear to be more stable.

In the banking sector, the situation has stabilized, but still weak, with low capitalization and non-performing loans by more than 50%, and is a danger to economic stability and hampers the economic recovery.

Fitch Ratings notes that to reduce the failure of foreign partners to assist, as well as internal and external geopolitical shocks. In addition, the Agency took into account the rating if in the area of ATO the situation will remain unchanged, “Yanukovych’s debt” to Russia will not prevent Ukraine to receive support.

In July, Fitch has left Ukraine’s rating at CCC, said in September that questioned the ability of the country to carry out reforms.