WASHINGTON: Credit rating agency Fitch downgraded Ukraine’s long-term debt outlook from positive to stable on Friday due to tensions with Russia, while maintaining its rating at B.

“Expectations of a more protracted period of heightened tensions with Russia, an increased downside risk of conflict, constrained financing conditions, moderate capital outflows and weakening international reserves, have increased external financing risks since our previous review in August,” the rating agency said.

Though downgraded from positive to stable, the outlook is not negative, as the agency believes “full-scale military conflict with Russia will be avoided.”

The agency is counting on a “somewhat greater availability of IFI [International Financial Institutions] and bilateral finance, Ukraine’s credible macro-policy framework and strengthened fiscal and FX reserves position coming into 2022,” which it said “will help mitigate impacts.”

The IMF on Wednesday urged a peaceful resolution to the conflict between Russia and Ukraine, stressing that it was already having an impact on energy prices and posed a threat to global growth.

Since the end of 2021, Russia has massed up to 100,000 soldiers on the border with Ukraine. Western states accuse Moscow of preparing to attack.

Moscow denies any plans to invade, while demanding written
guarantees for its own security, including assurances that Ukraine will not join Nato, and the end of the Atlantic Alliances expansion eastwards, in particular in the former Soviet republics.