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Collapse of Ukraine IMF plan would hit rating-Fitch

Published 09/08/2009, 11:23 AM
Updated 09/08/2009, 11:24 AM

LONDON, Sept 8 (Reuters) - A collapse of Ukraine's loan programme with the International Monetary Fund would hurt the country's rating, which is already low due to concern over Ukraine's finances, an analyst at Fitch Ratings said on Tuesday.

A Ukrainian presidential aide said on Tuesday that Ukraine has not met any conditions set by the IMF and is therefore unlikely to receive another tranche by the end of the year.

"A collapse of the IMF programme would put downward pressure on the ratings," said Andrew Colquhoun, a director of Fitch's sovereigns group.

Ukraine is rated single-B with a negative outlook, a rating which falls into the category of junk status.

Colquhoun said a sharp contraction in Ukraine's GDP, domestic political tensions and problems in Ukraine's relationship with Russia were among factors behind Ukraine's weak rating and negative outlook.

"The risks remain quite severe and that is reflected in the low ratings," he said.

The IMF said on Saturday a lack of unity among the political elite ahead of a presidential election in January was impacting Ukraine but that otherwise it was pleased with the central bank and government actions.

"We cannot prejudge developments, we are still in the region of speculation," Colquhoun said.

"I do not know for sure that the IMF programme is collapsing. I am not sure the IMF is prepared to pull the plug on Ukraine."

The IMF has disbursed over $10 billion of a $16.4 billion loan programme agreed with Kiev last November.

Colquhoun added that the central bank's decision this week to stop intervening on the interbank foreign exchange market and to move to an auction system was adding to investors' sense of uncertainty.

"This seems to be departing from the spirit of the commitments of the IMF programme, which was to move to a managed float," he said.

(Reporting by Carolyn Cohn; editing by Stephen Nisbet)

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