Ukraine’s credit rating may be cut because political infighting is hampering the ability of policy makers to address the country’s economic crisis, Moody’s Investors Service said, Bloomberg reported.

“Political uncertainty clouds the prospects for an orderly resolution of banking problems in the context of a severe economic downturn,” Jonathan Schiffer, senior credit officer at Moody’s in New York, wrote today in a release. Moody’s placed Ukraine’s local and foreign-currency government bond ranking of B1, four levels below investment grade, on review for downgrade.

Ukraine is grappling with reduced demand for exports, a lack of credit and a plunging currency as the country faces its first economic contraction after nine years of growth. Prime Minister Yulia Timoshenko, battling with President Viktor Yushchenko over economic policies, plans a budget deficit that puts the nation’s $16.4 billion International Monetary Fund bailout in jeopardy.

Видео дня

“Moody’s rating review will examine whether or not these disagreements can be resolved in a constructive manner such that the IMF package continues to function effectively,” the release said. Attempts by Ukraine’s central bank to arrest the 48 percent slide in the hryvnia over the past six months may also have “consequences” for government credit ratings, Moody’s said.

Moody’s review will be completed within three months, the report said.

Bloomberg