REUTERS
The main driver of the decision is the result of the announced new financing program with the International Monetary Fund.
Moody's Investors Service on June 12 upgraded the Government of Ukraine's long-term issuer and senior unsecured ratings to B3 from Caa1, the outlook on the ratings is stable.
The main driver of the decision to upgrade the ratings to B3 is the easing of Ukraine's near-term funding challenges and the safeguards afforded to recent improvements in its external vulnerability as a result of the announced new financing program with the International Monetary Fund (IMF), according to a press release.
It is noted the decision to upgrade the ratings also reflects Moody's expectation that the new IMF program will help anchor the reform progress achieved in recent years.
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With the economy forecasted by Moody's to contract by 4.5% this year and the fiscal response to the coronavirus outbreak, Moody's expects the government's budget deficit to increase to 7.5% of GDP in 2020, up from a deficit of 2.0% of GDP in 2019.
In addition, Moody's expects Ukraine's strengthened foreign exchange reserves, which increased markedly in 2019 on the back of strong foreign investor demand, to be preserved as the new IMF program buffers against the country's large refinancing needs and helps to limit private capital outflows by supporting investor sentiment.
Moody's forecasts foreign exchange reserves (excluding gold) to remain around US$22 billion by the end of the year, sufficient to cover around four months of imports and substantially larger than the nadir of US$4.7 billion in February 2015, as credible monetary policy and generally limited external pressures support a continued broad stabilization in the exchange rate.
As UNIAN reported earlier, the IMF says the country's public and government-guaranteed debt may grow to 65.4% of GDP in 2020 from 50.4% of GDP in 2019.