People’s Deputy, the Party of Regions parliamentary faction member, Minister of Economy of the Opposition government Iryna Akimova commented on the information that today the international rating agency Fitch Ratings has changed its prognosis on long-term ratings of Ukraine’s default as an issuer in foreign and national currency from “Stable” to “Negative”. In particular, she said:

- Worsening of the prognosis on long-term ratings of Ukraine’s default as an issuer to “Negative” by Fitch Ratings testifies the aggravation of political and economic risks in our country.

The political risks are apparent: they are related to unstable political situation, to the uncertainty regarding whether a new parliamentary coalition will be formed or new elections will be held.

But the main impact on the worsening of Ukraine’s rating is caused by economic risks. First and foremost, it is exacerbating inflationary process: by the end of year the highest-case inflation prognoses for Ukraine make up 21-22 per cent. It is also due to unfolded decline in the economic growth: as of August a cumulative estimate of Ukraine’s economic growth fell by 0.4 percentage points compared to the last year. In addition, the investment activity rates diminished three times. Definitely, it has disturbed foreign investors.

It is worth adding that in the light of expanding global crisis on financial markets the position of Ukrainian financial system seems to be precarious. Firstly, it is because of quite a large volume of foreign borrowings by commercial banks and complicated credit procedure. Secondly, it concerns the problem of growing trade balance deficit and would-be balance of payments deficit in 2009, which is likely to be accompanied with a considerable decline in foreign cash flow into Ukraine.

All this resulted in deterioration of macroeconomic stability in Ukraine. It is reflected in the risks which will be faced by investors coming into our country. Therefore, lowering of Ukraine’s rating by international agencies such as Fitch Ratings could have been foreseen. It is necessary to draw right conclusions and be engaged not only in political fight but also in urgent economic measures on leading the country out of the crisis.

The Party of Regions Press Service