MOODY’S on Friday cut Ukraine’s debt rating for the second time in three months and lowered the outlook to negative due to the growing risk the Russian invasion will affect the nation’s debt sustainability. The ratings agency cut the grade a notch to Caa3, after lowering it two notches from B3 in early March, saying the country could face “a more protracted military conflict than Moody’s initially expected” following the invasion in late February. That “increases the likelihood of a debt restructuring and losses being imposed on private-sector creditors,” the statement said. Despite large financial support from the international community to help with immediate needs, “the resulting significant rise in government debt is likely to prove unsustainable over the medium term” and could “impede further access to official financing.”

The US Congress on Thursday approved a gargantuan US$40-billion aid package for Ukraine to help fight Russia and keep the government operating, after a US$14-billion package in March. The International Monetary Fund in March approved a US$1.4-billion aid package for the war-torn country, while the World Bank has approved a loan of US$350 million as part of a total package of more than US$700 million. Ukrainian President Volodymyr Zelensky said his government needs US$7 billion a month to keep its economy afloat, while Moody’s estimates Ukraine faces financing needs of around US$50 billion this year. The agency expects the country’s economy to contract by 35 per cent this year as the war does massive damage to its productive capacity, in addition to the heavy human toll. AFP