Ukraine's foreign reserves declined by 1.2% m/m in March

Ukraine's foreign reserves declined by 1.2% m/m in March
Ukraine's foreign exchange reserves down by 1.2% m/m to $18.191bn
By bne IntelliNews April 10, 2018

Ukraine's foreign exchange reserves declined by 1.2% month-on-month to $18.191bn in March, the National Bank of Ukraine (NBU) said in a statement on April 6.

The result was attributed to debt repayments, the volume of which exceeded revenues from NBU currency interventions. Specifically, Kyiv channelled $1.3bn into the repayment and servicing of public and guaranteed foreign currency-pegged debt, except payments to the International Monetary Fund (IMF).

In March, Ukraine also repaid $186mn to the IMF. The amount of reserves was also affected by the revaluation of financial tools (change in market value, hryvnia exchange rate against foreign currencies) of $43.2mn.

The current level of Ukraine's FX reserves covers 3.4 months of future imports (vs 3.5 month in the previous month) and is sufficient to meet the country's obligations and carry out the current operations of the government and the NBU, the central bank said.

The NBU expects to receive $3.5bn in financing from the country's main donor the IMF, $1.5bn proceeds from Eurobond placements and $500mn in financing from the World Bank in 2018, according to the regulator's November inflationary report.

However, the IMF money is in doubt. Earlier, Ukraine and the IMF failed to agree a new price-setting formula for domestic gas tariffs, which is crucial for the continuation of existing funding from the $17.5bn bailout agreed with the IMF in 2015. The greenlighting of pension reform and creation of a specialised anti-corruption court are among other steps that are necessary for further IMF funding.