Fitch Ratings says that the engagement of the International Monetary Fund (IMF) is still key as Ukraine makes macro progress.
"Easing inflationary pressures, moderating economic imbalances and declining debt support Ukraine's sovereign credit profile, but IMF programme delays remain a source of uncertainty," Fitch Ratings says. "The programme is a key factor for sovereign creditworthiness, as it mitigates low external liquidity and reduces refinancing risks."
According to Fitch experts, exchange rate flexibility and moderate external imbalances should limit near-term balance-of-payments pressures, but the IMF Extended Fund Facility (EFF) is key to preserving international reserves and meeting rising sovereign debt payments. "When we affirmed Ukraine's sovereign rating in April, we expected the fourth review to be finalised in 3Q18 and acknowledged the increased risk of delays, which we believe have increased," they said.
According to them, pension reform, an updated privatisation bill, and passing a law to set up an independent anti-corruption court, including an amendment to meet international commitments, highlight the government's efforts to finalise the review. The main outstanding issues are potential modifications to the 2018 budget to meet the programme's 2.5% of GDP deficit target, and adjusting household heating tariffs.