Fitch affirms Ukraine’s rating at ‘RD’

Fitch Ratings affirmed Ukraine’s Long-Term Foreign-Currency Issuer Default Rating (LTFC IDR) at ‘Restricted Default’ (RD) as the country continues to restructure its external commercial debt, as per a statement on Friday.

Ukraine suspended payments on several obligations, including a $0.7 billion Cargill loan and an $825 million Ukrenergo Eurobond, with the debt service suspension expected to last until the restructuring process concludes.

While Fitch maintains the LTFC IDR at ‘RD,’ the Long-Term Local-Currency IDR is rated higher at ‘CCC+,’ reflecting Ukraine’s continued servicing of domestic debt.

The ongoing war with Russia, high defence-related spending, and reconstruction costs have kept fiscal deficits elevated, forecasted at over 19 per cent in 2024 and 2025. Public debt is expected to rise to 90.8 per cent of GDP in 2024.

Fitch projects economic growth at 4 per cent in 2024, supported by trade normalisation and government spending, but expects it to slow to 2.9 per cent in 2025 due to labour and energy shortages.

International reserves are set to remain stable at $42 billion in 2024, buoyed by official financing, including $50 billion from G7 loans backed by frozen Russian assets.

Fitch also highlighted governance challenges and weak institutional capacity as significant risks, while a durable ceasefire could substantially improve Ukraine’s economic outlook.

Attribution: Fitch

Subediting: Y.Yasser