Standard & Poor's increased Ukraine's rating from stable to positive

Standard & Poor's has announced that it has increased their rating for Ukraine from stable to positive. At the same time, it confirmed its long-term credit rating increase for Ukraine to B and short-term credit rating to B. Standard & Poors analyst Helen Hessle told Rosbalt that the rating incease is a reflection of the country's lowered debt burden and positive economic indicators.

The fact that country's increased gold reserves went from USD 4.4 billion at the end of 2002 to USD 7 billion at the end of 2003 makes it easier to solve the country's debt problem. Ukraine has large payments on its debt, which stood at USD 1.4 billion in 2003 and increases to USD 1.5 billion per year in the period 2004-2007. The recent return of the country to the international capital market also led to lowering the financial debt burden of the government. Moreover, in the next one to two years, the country's gross domestic product is expected to grow by 3-4% per year even if future structural reform will be put off because of political problems.

"Nevertheless the level of ratings for Ukraine is limited by the actions of influential groups on the economy, the widely spread practice of political patronage and difficulties connected with the restructuring of industry and the weak payment discipline in the economy," said Hessle.

The positive forecast shows the possibility of further increases in ratings over the next two years on the condition that reforms are continued, political and legal systems are strengthened, political and economic transparency are increased and more positive conditions are created for business.

The conduct of such politics will be difficult next year because of the uncertainty in the outcome of the presidential elections in 2004 and the unconstructive nature of the relations between political parties. If the presidential elections are conducted, however, on time and there are no serious violations, then the government should be able to realize a number of middle-term reforms, which should improve the political and economic environment in Ukraine as well its credit rating," said Hessle. "But if there are serious political problems and lower economic indicators then access to sources of financing could be more difficult," she said