News ID: 115265
Published: 1112 GMT April 11, 2015

Standard and Poor's downgrades Ukraine's credit rating

Standard and Poor's downgrades Ukraine's credit rating

Global ratings agency Standard and Poor's (S&P) has downgraded Ukraine's credit rating by one notch due to the country’s intentions to restructure its foreign debt.

"We would classify... restructuring of Ukraine's foreign currency debt as tantamount to default," the agency said on Friday, adding, "We are lowering our long-term foreign currency ratings on Ukraine to CC from CCC-." Press TV reported.

Kiev is in talks with its creditors for $15.3 billion (14.4 billion euros) in debt relief as part of a $40-billion (37 billion euros) four-year international rescue plan for the country.

Last month, the International Monetary Fund (IMF) approved a $17.5-billion (16.5 billion euros) loan to Ukraine in return for Kiev’s economic, budget, and monetary reforms. The IMF also gave its first $5-billion tranche of aid to Kiev in March.

IMF’s latest forecast shows that Ukraine’s economy shrank 6.8 percent in the last year and is expected to contract another 5.5 percent in the current year.

Official data indicated that the annual inflation rate in Ukraine jumped to 45.8 percent following a steep acceleration of 10.8 percent in the last month.

The eastern European nation, which has been the scene of deadly clashes between its army and pro-Russia forces in the east for almost a year, had a month-on-month inflation of 5.3 percent in February and 3.1 percent in January 2015.

A fragile deal between the Kiev government and pro-Russians signed in February almost ended the tensions. However, the country is left in the hands of a combination of monetary, budgetary, industrial, banking and energy crises that could make Kiev reliant on outside help for years.

The agreement, brokered in the Belarusian city of Minsk, was reached after marathon talks between the leaders of France, Germany, Russia, and Ukraine. It came into force on February 15.

Ukraine’s vital heavy industry in the eastern part of the country has also been damaged in the fierce fighting, while production has fallen by a fifth.

Moreover, as many foreign investors preferred to leave Ukraine amid the uncertainty that emerged from the armed conflict, the value of the local currency, the hryvnia, has plummeted by around 50 percent since the beginning of the year.

Resource: Press TV
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