Fitch has maintained Ukraine’s rating at RD – Restricted Default.

Fitch Ratings has affirmed Ukraine’s long-term foreign currency rating at restricted default (RD) as Ukraine continues to restructure its external debt.

“Ukraine’s foreign currency issuer default rating will remain at RD until Fitch assesses the completion of swaps and normalization of relations with a significant majority of external commercial creditors,” Fitch noted.

Ukraine’s national currency ratings are maintained at CCC+. A significant portion of the national debt belongs to the NBU and Ukrainian banks.

“Such an ownership structure would limit the benefits for Ukraine from any debt restructuring on loans, as it would create potential fiscal costs. It could also create risks to financial sector stability and harm the development of the domestic debt market,” the experts noted.

Fitch expects the general government deficit to remain high in 2024 and 2025, at 19.1% and 19.2%, respectively. This will be driven by high defense spending and reduced foreign grants that will not be covered by higher taxes.