How long will war last and will Ukraine survive financially: Fitch Ratings forecast
Russia's war with Ukraine will continue in 2025 - Fitch Ratings (Getty Images)
The international agency Fitch Ratings does not rule out that Russia's war against Ukraine may continue into 2025. Ukraine's ratings reflect a still significant credit risk given the protracted nature of the war, citing a Fitch statement.
According to the agency's forecast, the continuation of the war will lead to a large budget deficit (projected at 17.5% of GDP in 2024 and 15.3% in 2025) and financing uncertainty from 2025 onwards.
Fitch notes the impact of the US electoral cycle on aid to Ukraine, potential donor fatigue, residual risks related to EU financing plans, and the limited capacity of local banks to increase purchases of government debt obligations significantly.
At the same time, international reserves reached $37.2 billion at the end of July, and Ukraine’s robust policy measures, along with continued official support under the four-year $15.6 billion IMF Extended Fund Facility for 2023, reduce risks to macroeconomic and financial stability in the short term, the agency's analysts wrote.
"This further supports Ukraine's capacity to meet the new Eurobond commitments, despite the obvious exceptional uncertainty related to the war with Russia," the statement said.
Fitch Ratings has upgraded Ukraine's long-term local currency rating from CCC- to CCC+. At the same time, the agency affirmed the long-term foreign currency rating at RD (restricted default). The upgrade reflects the successful completion of Ukraine's Eurobond debt restructuring while continuing to service its obligations in hryvnia.
Previously, Fitch Ratings predicted a very protracted war between Russia and Ukraine.
