Credit-Rating confirms the rating of Odesa at uaАА-, determines investment attractiveness at uaINV5 (the highest level) Credit-Rating confirms the rating of Odesa at uaАА-

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Expert Opinion

08.11.2010

Credit-Rating: Ukraine’s Economy in September and October 2010

Credit-Rating has today published a monthly survey of Ukraine’s economic development in September and October 2010. The survey features evaluation of real and financial sectors of economy, of balance of payments, of currency and stock markets, state budget sector and government’s debt-related policy.

Considering the pace of Ukraine’s economic development in 1Q-3Q2010, and traditionally accelerating growth rates in the 4th quarter of a year, Credit-Rating expects GDP growth at 5% by end-2010. This growth will be fueled by seasonal improvement of external environment under simultaneously rising domestic consumer demand.

The GDP growth in 9M2010 at 4% has been driven by numerous factors connected with improvements in both external and internal economic environments. The economy growth in the states that are major Ukraine’s trade partners in 1H2010 contributed to rising production and sale at the companies which are traditional Ukraine’s exporters, notably in metallurgical and machine-building sectors. The contribution to GDP growth by the sectors orientated at meeting domestic consumer demand remains also stable, being underpinned by rising actual salaries, improving consumer sentiments, and relatively stable labour market.

The improved investment climate in Ukraine after the resumption of cooperation with the IMF allows for maintaining rather high rates of foreign direct investments, and contributes to inflow of debt capital, primary in the public administration sector. The government’s active policy aimed at raising debt funds in 2010 has prompted a significant rise in the debt burden of the central government. However, Credit-Rating should note that under retaining even nature of payments by repayment of the principal, the existing debt burden on the state budget may be deemed as moderate. It is worth mentioning that considering traditionally decreasing balances on the general treasury account in January and February, a considerable amount of payments on redemption of the sovereign debt in first two months of 2011 exposes to risks of decreasing liquidity of the state budget. Credit-Rating also anticipates that fiscal risks of insufficient execution of the state budget revenues will persist in 4Q2010, which, coupled with high growth of the budget expenditures, may negatively affect balance of the budget indicators.

Survey of Ukraine’s economic development in September and October 2010.

Credit-Rating agency has operated in the Ukrainian market since 2001 being committed to assignment of the national scale ratings. The agency has assigned 1109 ratings. In September and October 2010 Credit-Rating assigned 13 ratings, revised 258 ratings, suspended 39 ratings, and withdrew 20 ratings. As of November 1, 2010 Credit-Rating maintains monitoring of 616 ratings, in fact 459 of corporate, 103 of financial and 54 of municipal sectors.

Information on all credit ratings assigned in accordance with the National Rating Scale may be found in REUTERS and BLOOMBERG information systems.

For more information, please contact:
Department for Information and Communications
Sergey Rozumyak +38044490 25 50
SRozumyak@credit-rating.com.ua
Denis Rudenko
DRudenko@credit-rating.ua

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