(The following statement was released by the rating agency)
Link to Fitch Ratings' Report: Ukraine
NEW YORK/LONDON, September 16 (Fitch) The IMF executive board's
approval of a
disbursement of USD1.0bn to Ukraine is positive but does not
about Ukraine's ability to deliver on reforms agreed with the
Ratings says. Political uncertainty and a challenging reform
agenda mean delays
to future disbursements under Ukraine's IMF programme cannot be
highlighting Ukraine's persistent external vulnerabilities.
The IMF said on Wednesday that it had approved the disbursement
second review of its USD17.5bn four-year Extended Fund Facility.
The review was
delayed for nearly one year as political tensions saw the
government lose its majority and hampered the passage of reforms
Groysman administration that took office in April.
The disbursement of the IMF tranche would strengthen a weak
and should also unlock US loan guarantees and EU funds, which
are an important
component of the government's financing plan.
Developments since we affirmed Ukraine's 'CCC' sovereign rating
in May are
consistent with our view that the Groysman government would move
to secure the
delayed IMF disbursement, but that progress on the necessary
reforms would be
Implementation of some anti-corruption measures, detailed to the
IMF in July
2015, has been slow, although a new system to monitor the income
declarations of public officials has been introduced. The
government has also
committed to tackle other longstanding issues, such as improving
the health of
the banking sector and pension reform.
However, the capacity of the Groysman administration to deliver
structural reform remains uncertain. It has a very small
and discipline among some constituent parties has been weak.
External financing pressures have eased in 2016, albeit in the
context of high
real interest rates and currency controls. Reserves have climbed
this year as
the central bank has purchased USD1.8bn in foreign exchange, the
been able to issue in foreign currency on the domestic market,
and there have
been some capital inflows. But reserves are still low at
liquidity is weak, and demand for foreign exchange has pushed
the hryvnia lower.
Ukraine's low sovereign rating reflects last year's
restructuring of its
privately held Eurobonds, and the persistent risk of delays to
flows of external
support that underpin reserves and macroeconomic stability. The
of another sovereign default is mitigated by a light repayment
2019, but an upgrade is unlikely until the authorities have
established a track
record of broad IMF programme compliance.
+1 212 908 0277
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY
+44 20 3530 1588
Media Relations: Peter Fitzpatrick, London, Tel: +44 20 3530
The above article originally appeared as a post on the Fitch
Wire credit market
commentary page. The original article can be accessed at
All opinions expressed are those of Fitch Ratings.
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS
here. IN ADDITION,
ON THE AGENCY'S
PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS,
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE
AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE
FROM THE 'CODE OF
CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER
SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES.
DETAILS OF THIS
SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN
ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER
ON THE FITCH