January 22, 2013 / 3:35 PM / 5 years ago

TEXT-S&P expects Ukraine's external financing needs to remain high

2 Min Read

Jan 22 - In a report published to today, Standard & Poor's Ratings Services
said it expected the government of Ukraine's gross financing needs, and those of
the National Bank of Ukraine (NBU, the central bank) to remain elevated over the
medium term (see "No Medium-Term Respite For Ukraine's High External Financing
Needs"). The main components of the gross financing needs are likely to remain
the government's annual deficit and the servicing of domestic (local currency)
government debt. In addition, a sharp increase in government and NBU foreign
currency debt service to the International Monetary Fund (IMF) triggered a
corresponding spike in external financing needs in 2012. 

We expect repayment of IMF loans to keep external financing needs at 
historically high levels in 2013-2017. As a result of this external debt 
service and the NBU's attempts to defend the exchange rate, foreign currency 
reserves at the NBU declined to $29 billion in October 2012 (latest available 
data) from $32 billion at the beginning of the year. The cost of both domestic 
and external government borrowing remains high. These factors contributed to 
our Dec. 7, 2012, lowering of our long-term foreign and local currency 
sovereign credit ratings on Ukraine to 'B' from 'B+'.


The report is available to subscribers of RatingsDirect on the Global Credit 
Portal at www.globalcreditportal.com.  If you are not a RatingsDirect 
subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 
or sending an e-mail to research_request@standardandpoors.com. Ratings 
information can also be found on Standard & Poor's public Web site by using 
the Ratings search box located in the left column at www.standardandpoors.com.

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