International rating agency Fitch Ratings confirmed long-term rating of Ukraine in foreign currency at the level of “Restricted Default” (RD). This status reflects the country’s temporary difficulties in fulfilling its obligations under external commercial debts. The reason for this is the restructuring of the external debt, which is ongoing with the aim of easing the financial pressure on the economy of Ukraine.
The “Limited Default” rating will be maintained until the restructuring process is completed, Fitch explains. As of today, the government of Ukraine has temporarily suspended payments on a number of debt instruments, including loans and Eurobonds. In particular:
- Cargill’s $0.7 billion loan, on which payments were suspended on September 3, 2024.
- Eurobonds of “Ukrenergo”, amounting to 825 million dollars, with suspension of payments from November 9, 2024.
- GDP warrants for which payments are deferred until May 31, 2025.
The Ukrainian government successfully completed the exchange of Eurobonds in September 2024, which became one of the important steps in the direction of stabilizing the financial situation. However, restructuring the remaining debts remains a difficult task. The Fitch agency notes that the rating will be revised only after the completion of this process and the restoration of stable relations with creditors.
Fitch experts emphasize that the temporary suspension of debt service allows Ukraine to redistribute resources to urgent needs, including supporting the economy in wartime conditions and restoring destroyed infrastructure.
The financial situation of Ukraine is complicated by the consequences of the full-scale invasion of Russia. Rising defense and infrastructure spending has forced the government to turn to international partners for financial assistance and debt restructuring.
Fitch’s decision to maintain the rating at the RD level indicates Ukraine’s temporary financial difficulties, which, however, can be overcome if negotiations with external creditors are successfully completed.
Despite the current challenges, the completion of the restructuring will create opportunities to restore economic stability and restore confidence in the Ukrainian financial system. The government continues to work on strengthening its position in the international arena in order to ensure sustainable development of the country in the conditions of war.
