Ukraine C/A balance improves on delayed gas imports

Ukraine’s September current accounts were reported at a USD 135 mln surplus compared to a USD 840 mln deficit a year ago, according to a National Bank (NBU) report on Oct. 30. The surplus swelled from USD 57 mln in August. A significant slowdown in export declines (-21.4% yoy vs. -25.4% yoy in August) along with faster imports contraction (-31.4% yoy vs. -25.6% in August) secured the C/A improvement. Exports of goods declined (-24% yoy) mainly on the back of machinery (-39% yoy), metals (-23% yoy) and food (-14% yoy). Imports of goods plunged 35% yoy due to the energy bill (-40% yoy), food (-39% yoy), chemicals (-24% yoy) and machinery (-17% yoy).

Financial accounts worsened somewhat to a USD 210 mln surplus compared to a USD 476 mln surplus a year ago (and a USD 447 mln surplus in August). Worsened FDI (down to USD 34 mln from USD 642 mln in August) was the main reason for the outcome. The result might have been worse if not for the USD 500 mln loan from the World Bank. At the same time, we are continuing to observe foreign currency returning to the banking system (USD 316 mln compared to USD 291 mln in August).

The general balance in September was reported at a USD 348 mln surplus. Accounting for USD 176 mln of that sum being deducted for IMF repayments, gross international reserves increased to USD 12.8 bln as of end-September, which is nearly 3.1 months of imports.

Alexander Paraschiy: The September result was much better than we expected. The strengthening C/A surplus was primarily due to delayed natural gas imports, which is what translated into a low energy bill. In particular, gas imports in September were 0.8 bcm while we anticipated this figure to be at least twice more. At the same time, the tendency should have changed already in October when Ukraine resumed gas imports from Russia.

In other words, in October-December we expected C/A switching into red owing to a boosted energy bill. Still, in light of the gradually slowing drop in exports, the full year 2015 C/A deficit has good chance to be better than our initial forecast (USD 2.2 bln C/A deficit). Against this backdrop, we are revising our 2015 C/A forecast to USD 1.5 bln deficit (1.7% of GDP).

Источник: Конкорд Капитал