Fitch Ratings has affirmed Ukraine's Long-Term Foreign Currency Issuer Default Rating (IDR) at 'CC'. This level means a high probability of default.

This is reported by Fitch Ratings.

The affirmation of Ukraine's 'CC' IDR reflects Fitch's expectation of further restructuring of the country's commercial debt before the end of the two-year moratorium on Eurobond payments on 1 September 2024.

In addition, Fitch affirmed the issuer's default ratings in the national currency at the level of "CCC-". The higher rating of local currency debt reflects the expectation that it will be excluded from the 2024 restructuring.

The agency explained that the local currency rating reflects significant credit risk on long-term debt, which exists in part due to uncertainty about funding sources during a potentially long period of very high budget deficits.

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GDP and inflation in Ukraine – forecast for 2024

The agency expects that Russia's war against Ukraine will continue throughout 2024 on its current scale.

Fitch forecasts Ukraine's GDP growth of 2023.5% in 1 after falling by 29.1% last year. This is 1.6 percentage points higher than the last review in June. The reasons for GDP growth are further adaptation of businesses to the conditions of war, improved consumer confidence, and agricultural growth.

At the same time, Ukraine's state budget deficit will remain high. Thus, in 2023, the deficit will increase by 1.6 percentage points to 17% of GDP. And in 2024, the budget deficit will be 16.9% of GDP.

As for inflation in Ukraine, it is expected to increase to an average of 9.1% during 2024-2025.

Recall that on November 28, President of Ukraine Volodymyr Zelensky signed the law on the state budget of Ukraine for 2024. The document predicts that GDP will reach 4.6%, inflation – 9.7%, and the average annual dollar exchange rate – UAH 40.7.

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