Moody’s has maintained Ukraine’s pre-default rating.

On May 30, Moody’s Rating Agency affirmed the long-term issuer ratings of the Ukrainian government in foreign and national currencies at Ca – one of the lowest credit ratings on Moody’s scale, indicating a very high risk of default. The justification states that the ongoing war with Russia continues to create long-term challenges for the economy and public finances.

The agency forecasts that Ukraine’s economic growth rate in 2025 will slow to 2.5% (compared to 2.9% in 2024), the state budget deficit will increase to 19% (up from 17% in 2024), and public debt will exceed 110% of GDP by the end of the year (up from 90% in 2024). The financing gap will be primarily covered by foreign aid.

Even if Ukraine manages to reach some form of ceasefire agreement with Russia, a significant economic recovery is unlikely without reliable security guarantees, according to Moody’s. Ukraine’s rating could worsen if the war exacerbates liquidity problems and increases pressure on the economy, it fails to meet the terms of the IMF program, or if pro-Russian political forces come to power.

The rating could improve if the war ends and the economy recovers, but “we see a low probability of such a scenario in the near term,” the forecast says.