January 24, 2005 |
|The announcement that liberal Viktor Yushchenko would be sworn in as Ukraine's president earned the country a swift boost Friday when Fitch Ratings raised its sovereign credit rating to BB- from B+. |
Fitch's move, which prompted an immediate fall in yields on Ukraine sovereign debt, came a day after Yushchenko's Dec. 26 victory in a re-run election was confirmed by the Supreme Court in Kiev.
The Ukraine parliament voted to host his inauguration on Sunday.
"The prospective presidential inauguration of Viktor Yushchenko, set for Jan. 23, should mark the passing of the period of most acute and immediate political risk," Edward Parker, senior director in the Fitch Sovereigns Group said in a statement. "At the same time, latest data indicate that foreign exchange reserves and household bank deposits have started to stabilize," he said.
He added that moderate public and external debt ratios -- estimated at 25 percent of 2004 gross domestic product -- and strong growth prospects merited the upgrade, which leaves Ukraine three rungs below the coveted investment grade.
Yushchenko will inherit an economy that is in a period of rapid growth, but also one experiencing growing pains associated with a nascent banking industry, a shaky infrastructure, and the competing and powerful business interests that in the past have wielded great political influence.
Fitch said that while Yushchenko has yet to set out detailed economic policy goals or make key appointments, his track record suggests he will implement prudent macroeconomic policies and structural reforms, which should improve the business climate.
Fitch's upgrade took Ukraine's rating to equal that of Brazil and Turkey. It kept its outlook for Ukraine's long-term foreign and local currency ratings at stable.
The other two main credit ratings agencies, Standard & Poor's and Moody's Investors Service have Ukraine at B+ and B1, respectively. Both are four notches below investment grade.