World Bank voices concern over considerable drop in Ukraine’s Fx/gold reserves.

By bne IntelliNews October 31, 2013

The World Bank has voiced concern over a considerable drop in the National Bank's gold and foreign currency reserves for the last few months, World Bank Director for Ukraine, Belarus and Moldova Qimiao Fan said. The current reserves will finance imports finance for less than 2.5 months (compared to an acceptable 3 months), he noted.

The National Bank's requirement for the mandatory sale of some foreign currency earnings both by exporters, legal entities-residents and entrepreneurs is considered to be inadequate as it is ineffective for a long-term run, he added. According to the World Bank, a significant current account deficit of the balance of payments and the fiscal deficit affect the hryvnia exchange rate and the gold and foreign currency reserves.

In September, the international reserves of the National Bank of Ukraine (NBU) decreased by 0.06% or USD 12.88mn and amounted to USD 21,639mn, the central bank has announced. In September following factors influenced the changes: attracting the funds by the government at the domestic and foreign markets (USD 882mn), payments of state and secured debts (USD 475mn), holding the interventions at the interbank exchange market by the National bank (-USD 582.5mn). In Jan-Sep, central’s bank’s reserves decreased by 11.84% from USD 24,546.2mn to USD 21,639mn.

Earlier this year, PM Mykola Azarov said that Ukraine will not be spending its foreign reserves on supporting national currency in 2013. According to various experts, Ukraine’s international reserves, that hardly cover 3-month exports, will fall to USD 20.5bn-20.7bn by the end of the year, due to widening of the foreign trade deficit and repayment of external debts.

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