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Standard & Poor's Affirmed Ukraine's rating at B with Stable Outlook

On March 12, the international credit rating agency Standard & Poor's affirmed Ukraine's long-term and short-term foreign and local currency sovereign credit ratings at B and national scale rating on Ukraine at uaA. The long-term outlook is stable. 

The S&P credit rating agency notes that Ukraine's economic growth, balance of payments, and public finances all outperformed analysts' expectations. Ukraine's international reserves have increased, providing a cushion against potential adverse external developments including further delays in the disbursement of concessional loans. However, the epidemiological considerations still pose an important risk. 

The ratings on Ukraine are constrained by its low per capita income and developing institutions.

Stronger macroeconomic management since 2015 and augmented foreign exchange reserves support S&P sovereign ratings on Ukraine. The ongoing implementation of reforms helps the government access commercial debt markets and receive concessional funding from international financial institutions. However, the health situation remains challenging and vaccination in Ukraine remains at an earlier stage than in most European peers, increasing potential risks to the agency's baseline outlook for an accelerated economic recovery. 

S&P's stable outlook reflects risks to Ukraine's economy from delayed access to concessional financing, a weak external environment, and the potential for a reversal of past reforms. These risks are balanced by growing international reserves. 

S&P may upgrade Ukraine's sovereign credit rating if the state budget deficit is smaller than the agency currently forecasts. It could be a result of stronger economic recovery and/or fiscal consolidation. The rating could also benefit should Ukraine's external liquidity metrics outperform the analysts` projections.

At the same time, the agency notes that a downgrade could occur if there are disruptions to the flow of concessional financing from international financial institutions or a lack of access to capital markets this year, which would call into question the government's ability to meet its debt obligations. 

The S&P forecasts Ukraine's GDP growth of 4% in 2021. 

"We are pleased that this year the second leading international credit rating agency has affirmed Ukraine's sovereign rating and a stable outlook. Ukraine is facing the economic challenges of the COVID-19 pandemic better than other emerging markets. We continue implementing policies aimed at strengthening the macroeconomic situation in the country. We hope that the coordinated efforts of all branches of power will lead to an upgrade of Ukraine's sovereign credit rating in the future" - noted Sergii Marchenko, Finance Minister of Ukraine. 

More detailed information is in the S&P report.