Ukraine's international reserves increase 21% in 2017

Ukraine's international reserves increase 21% in 2017
Ukraine built up $18bn in hard currency reserves in 2017
By bne IntelliNews January 9, 2018

Ukraine's foreign exchange reserves increased by 21% to $18.805bn in 2017, the National Bank of Ukraine (NBU) said in a statement on January 5.

The result was mainly attributed to the obtaining a $1bn tranche from the International Monetary Fund (IMF), as well as FX purchases totalling $1.3bn from the central bank's FX market interventions. The reserves declined by 0.5% month-on-month in December, according to the regulator.

The current level of Ukraine's forex reserves covers 3.6 months of future imports and is sufficient to meet the country's obligations and carry out the current operations of the government and the NBU, the central bank added.

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 funding from the international donors in 2018 is in danger after the government failure to carry through on reform promises and in particular following an open attack by the state on its new anti-corruption institutions that were set up at the insistence of Ukraine’s partners.

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.