RIA Novosti reports that according to the agency, the reduction was caused by a deficiency of external liquidity which increases the risk of deterioration of the economic situation in the country. The agency notes that the main incentive for the downgrade was the deterioration of the institutional stability in the country on the background of poor predictability of the policy, as well as due to the reduction of transparency. In particular, the country's inability to agree on a new price for Russian gas within 12 months.
In addition, the agency is concerned about the liquidity situation. Since the International Monetary Fund forecasts that international reserves of the National Bank of Ukraine may fall to $24 billion by the end of the year. Back in September, National Bank head Serhii Arbuzov dismissed the claims that the regulator was depleting its reserves by supporting the hryvnia. He also pointed out that the National Bank's gold reserves have been at 30 billion dollars for a while.
Another factor reducing the sovereign rating is relatively weak economic prospects of the country in the short and medium term. The rating outlook could be changed to stable in the event of the successful implementation of reforms envisaged under the IMF program.