S&P may cut Ukraine's ratings on refinancing worries
Doubts the country`s ability to implement the IMF`s loan agreement
Standard & Poor`s Ratings Services warned on Monday it could cut the foreign and local sovereign ratings of Ukraine in the next 90 days as it doubts the country`s ability to implement the IMF`s loan agreement, Reuters reported.
S&P said it could cut Ukraine`s B foreign currency rating and B-plus local currency rating by one or more notches. For a full text of the agency`s statement please double-click on [ID:nHKG238893].
"Ukraine`s political commitment to implementing the IMF loan`s conditions, including structural fiscal tightening and banking-system consolidation, is wavering against a backdrop of sharply contracting growth, weakened terms of trade, and approaching presidential elections," the agency said in a statement.
S&P said it was awaiting the government`s clarification on the IMF programme before deciding on the rating and warned the economy faced refinancing risk because both the government and private sector suffered from a lack of funding sources.
"The near total closure of the external borrowing channel has contributed to a loss of confidence of domestic economic agents in the stability of the exchange rate and the banking system," S&P said.
It said that as of end-January, Ukraine`s external reserves covered just over 100 percent of this year`s banking sector repayments leaving nothing for corporate obligations, estimated at $9.5 billion. The figure excludes trade financing.