What is known about the rate of growth of the national debt of Ukraine during 2024

The agency's report notes that the current level of Ukraine's public debt is significantly higher than the average value of 70.9% for sovereign debt obligations with a "B"/"C"/"D" rating.

The growth of the national debt of Ukraine is associated with the weakening of the hryvnia and the increase in the state budget deficit.

While 77% of external debt is highly concessional, 74% of the total debt is denominated in foreign currency, Fitch analysts add.

Fitch estimates external financing needs at $38 billion in 2025, up from $41 billion in 2024.

At the same time, according to estimates, the current account deficit will expand to 8.4% of GDP in 2024 and 13.6% in 2025.

The agency confirmed the long-term rating of Ukraine in foreign currency at the level of limited default, as the country is in the process of restructuring its foreign debt.

The debt service suspension is expected to last until the debt restructuring process is completed. Ukrenergo did not pay deferred interest on November 9, 2024. The RDE of Ukraine in foreign currency will remain at the level of "RD" until Fitch assesses the completion of exchanges and the normalization of relations with a significant majority of external commercial creditors, the agency emphasizes.

Ratings of Ukraine in the national currency are kept at the "CCC+" level. A significant part of the national debt belongs to the NBU and Ukrainian banks.

In our opinion, such an ownership structure will limit the benefits for Ukraine from any debt restructuring, as it will create potential fiscal costs. Such restructuring may also create risks for the stability of the financial sector and harm the development of the domestic debt market, warn Fitch analysts.

Fitch expects the general government budget deficit to remain high in 2025, at 19.1% and 19.2%, respectively.

The agency predicts that despite the recent passage of tax hikes, high levels of defense spending and a reduction in foreign grants will help maintain a large deficit.

Fitch predicted the duration of the war unleashed by Russia against Ukraine

International agency Fitch Ratings expects Russia's war with Ukraine to continue in 2025 within its current broad parameters. A ceasefire is possible, but a peace agreement is unlikely.

In our opinion, despite some territorial acquisitions by Russia from the end of 2023, Western military support and firm determination should allow Ukraine to prevent significant additional territorial losses, the agency's analysts note.

According to them, the stated political goal of the new US administration to end the war could lead to a negotiated ceasefire, "but a peace agreement is unlikely due to the complex concessions that will be required from both sides."

The parameters of the negotiated ceasefire, including security guarantees for Ukraine and the territories that will remain under Russian control, remain uncertain, Fitch notes.