[quote]Standard and Poors' reduced Ukraine’s rating from CCC to CCC-plus with a negative outlook.[I]"Ukraine will default in the absence of significantly favourable changes in circumstances,"[/I] which it doesn't anticipate, the Financial Times cites S&P.
[I]“The[/I] [URL="http://rt.com/news/ukraine-kiev-death-toll-955/"]clashes[/URL] [I]between protesters and security forces that began on Feb. 18 lead us to conclude that a conciliatory end to the political stand-off is now out of reach,”[/I] the agency said.
[I]“We believe that the Russian government's support for Ukraine is tied to the current leadership and its political orientation away from the EU and toward Russia. As a result of the intensifying political turmoil in Ukraine, we consider that continued Russian support up to the committed[/I] [URL="http://rt.com/business/ukraine-15-billion-gas-381/"]$15 billion[/URL] [I]is increasingly uncertain.”[/I]
[I]“Should Russian financial support fall short of Russia's commitments, we expect the government of Ukraine to default on its foreign currency obligations,”[/I] the report added.
The sliding hryvnia is also adding pressure on government solvency, as over a half of Ukraine’s debt is denominated in foreign currency. Ukraine’s hryvnia hit its all-time low of 8.95 to the dollar two days ago, despite every effort by the government to keep the currency in check.
S&P says the hryvnia is highly likely to [URL="http://rt.com/business/russia-ruble-tenge-currencies-367/"]devalue[/URL] soon.
Timur Nigmatullin, an analyst from Investcafe, says that all the key figures show that Ukraine’s solvency is now extremely weak, regardless of the next tranches from Russia.
The budget for 2013 was based on the absolutely unrealistic GDP growth of 4.5 percent, while in reality the economy was balancing between stagnation and recession last year. [I]“As a result, the budget deficit reached $10 billion,”[/I] Nigmatullin said. Also, to support the hryvnia, Ukraine’s government has been actively spending money from its gold and forex reserves, which have fallen to a critical level of $17.8 billion. [I]“This would hardly cover two or three months of imported goods and services and is half the monetary base.”[/quote]
[URL="http://rt.com/business/s&p-ukraine-protests-economy-054/"]Source[/URL]
RIP in peace Ukraine[/I]
Why would anyone expect financial support to fall short if it has been explicitly stated, multiple times, that the support will continue regardless of situation. There has been zero indication to the countrary as of yet.
[QUOTE=gudman;43996129]Why would anyone expect financial support to fall short if it has been explicitly stated, multiple times, that the support will continue regardless of situation. There has been zero indication to the countrary as of yet.[/QUOTE]
What reason would Russia have to give so much money to a new government that won't be loyal to them?
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