Ukraine’s gross international reserves rose by over $100mn to $14.1bn in July, the National Bank of Ukraine (NBU) reported on August 5, their highest level since the economy went into meltdown two years ago.

The main factors driving the increase were the NBU’s purchase of foreign currency worth $257.8mn in July and funds from local Eurobonds placement $98.0mn. However, external debt servicing repayments of $329.7mn ate up some of the reserves accumulations.

Still, the rise in reserves is good news as by the end of July gross international reserves were enough to cover 3.6 months of imports, which  is above the level economists says is needed to ensure the stability of the national currency.

Concorde Capital analyst Alexander Paraschiy commented: “The gross reserves dynamics are perfectly in line with what we estimated. Delayed natural gas purchases, as well as a decline in debt servicing costs after debt restructuring, are still creating an excess supply of foreign cash in what translates into an accumulation of reserves, even without an anticipated IMF tranche. In July, Ukraine imported only 0.4 bcm of natural gas while in 2H16, nearly 1.5 bcm of monthly average gas imports is needed. In regards to debt servicing costs for July, they reached $329.7mn, half the level in the same year-ago month ($755mn).”

Paraschiy says the situation is going to get harder as winter approaches and Ukraine will have to significantly increase its gas imports to heat the country. The beneficial effects from last year’s debt restructuring deal are also set to wear off soon as debt servicing on the restructured debt will start soon.

These factors means Ukraine will again become dependent on hand outs from the IMF, which has currently de facato suspended its programme due the government’s failure to meet reform demands. The government was supposed to pass several crucial reforms demanded by the IMF as a prerequisite to releasing the next tranch of approximately $1bn before it broke up for the summer recess, but failed to do so.

Several other loans from the EU (up to €1.2bn) and Eurobonds ($1.0bn) placed under US government guarantees are also stuck as they are tied to the IMF approval of the government reform efforts.

“Since we still believe in the IMF tranche arriving in the fall, we are keeping our gross reserves forecast at $18bn for end-2016, which is 4.2 months of imports,” Paraschiy said in a note.