Fitch revises Ukraine's outlook to positive, affirms at 'B'

"On August 6, 2021, the international credit ratings agency Fitch Ratings revised the outlook on Ukraine's long-term foreign-currency issuer default rating (IDR) from stable to positive and affirmed the IDR at 'B'," the press service of the Ministry of Finance of Ukraine informs.

"Ukraine's credit fundamentals have been relatively resilient to the coronavirus shock, and we expect public debt/GDP to fall in 2021 on the back of budget outperformance and recovering GDP. Foreign exchange reserves have trended up, and Ukraine has retained access to commercial and IFI external finance, despite uneven progress against the IMF stand-by arrangement (SBA)," reads the commentary by Fitch.

The analysts note a consolidation of the credible policy framework, underpinned by exchange rate flexibility, commitment to inflation-targeting, and prudent fiscal policy, which has supported greater macroeconomic stability and a marked reduction in general government debt since recovery from the 2014-2015 geopolitical and economic crises.

Fitch forecasts the general government deficit narrows 1.7pp in 2021, to 4% of GDP, below the government state deficit target of 5.1%. The general government deficit falls further to 3.2% of GDP in 2022, and 2.9% in 2023. General government debt is projected to fall 3.9pp in 2021 to 50% of GDP (57% including guarantees). This is supported by deficit reduction, growth in nominal GDP, and 3% appreciation of the hryvnia against the US dollar.

"We welcome Fitch Rating's decision to revise Ukraine's IDR rating outlook from stable to positive. Despite all the difficulties caused by the coronavirus pandemic, during the year of peak payments on government debt, we managed to reduce credit risks. This has been achieved through enhanced macroeconomic stability. Ukraine has once again shown better economic performance than most of its peers. We continue pursuing the policy of fiscal consolidation, which should lead to greater stability of public finances of Ukraine and, as a consequence, better credit rating of Ukraine in the future," commented Minister of Finance of Ukraine Serhiy Marchenko.

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