Fitch has maintained Ukraine’s rating at Restricted Default but expects macroeconomic indicators to deteriorate.

Fitch has affirmed Ukraine’s rating at Restricted Default for the second consecutive time in response to its foreign currency debts. The national currency rating stands at CCC+, indicating a very high risk. Fitch explained the decision by noting that Ukraine is still restructuring its external debt. Although Ukrenergo has reached an agreement with bondholders to restructure 2021 green bonds totaling $825M, GDP warrants ($2.6B) and the Cargill loan ($0.7B) remain unrestructured. Ukraine also continues to service its domestic debt in hryvnia, resulting in a higher national currency rating.

Fitch predicts that domestic borrowing will keep rising, particularly in 2026, against a backdrop of reduced external financial support. If Ukraine secures a record $55B in external financing in 2025, compared to the typical $25 billion annually from 2022 to 2024, borrowing may become less predictable and likely decrease.

Moreover, analysts have revised Ukraine’s GDP growth forecast for this year down from 2.9% to 2.5%. Average annual inflation is projected to be 12.3% in 2025, decreasing to 6.5% in 2026. Meanwhile, the budget deficit is anticipated to rise to 19.3% of GDP in 2025.