Moody’s affirms Ukraine’s Ca rating, citing high default risk

On May 30, Moody's affirmed the long-term foreign and local currency issuer ratings of the Government of Ukraine at Ca, maintaining a stable outlook.

Ca is among the lowest ratings on Moody's scale, indicating a very high risk of default.

According to the rationale published on Moody’s website, the ongoing war with Russia continues to pose significant long-term challenges to Ukraine’s economy and public finances. Even after the planned Eurobond restructuring in 2024, the country’s debt burden remains elevated and is expected to increase further.

Moody's projects that Ukraine’s economic growth will slow to 2.5% in 2025 (down from 2.9% in 2024). The general government deficit is forecast to widen to 19% of GDP (from 17% in 2024), while public debt is expected to exceed 110% of GDP by year-end (up from 90% in 2024).

Liquidity pressures remain severe, as import demand significantly outpaces export capacity. The resulting financing gap will largely be covered by external assistance.

Even if Ukraine manages to reach a ceasefire agreement with Russia, Moody’s notes that a meaningful economic recovery is unlikely without robust and credible security guarantees.

Ukraine’s rating could be downgraded further from the current Ca level if the war exacerbates liquidity challenges or increases pressure on the economy. A downgrade is also possible if Ukraine fails to comply with the conditions of the IMF program or if pro-Russian political forces come to power.

Theoretically, the rating could be upgraded if the war ends and the economy begins to recover, but Moody's sees a low probability of such a scenario in the near term.

• A week prior to Moody’s decision, Fitch affirmed Ukraine’s rating at ‘Restricted Default’. S&P has maintained Ukraine’s rating at the same level since August 2024.