Ukraine gross foreign reserves fall USD 0.8 bln in March

Ukraine’s gross international reserves fell 5.7%, or USD 768 mln, to USD 12.7 bln in March, the National Bank of Ukraine (NBU) reported on April 5. The main factors were external debt servicing, as well as swap operations. In particular, Ukraine paid USD 473.3 mln in coupons on Eurobonds, returned USD 436.0 mln on swap operations and wired USD 11.4 mln to the IMF. The NBU spent only USD 2.1 mln net on ForEx interventions. The main inflow was a USD 334 mln loan from the Japan International Cooperation Agency. By the end of March, gross international reserves equaled 3.4 months of imports.

Alexander Paraschiy: The political crisis has taken its toll on financial inflows to the country. Initially, Ukraine was supposed to receive an IMF tranche of at least USD 1.7 bln and USD 1.0 bln in guarantees on Eurobonds from the U.S. government by the end of 1Q16. However, the corruption scandal that started in early February and is still ongoing effectively blocked funding from abroad. The problem should be resolved soon with a new parliamentary coalition, which will renew IMF funding and enable gross reserves to grow to USD 18 bln in 2016. However, we cannot rule out a prolonged period of political uncertainty in which the lame duck Cabinet remains intact until autumn, when early parliamentary elections would be held. In which case, gross reserves will keep falling to the USD 10 bln mark.



Ukraine state debt falls 1.7% in 2M16
Ukraine’s state debt fell 1.7% to USD 64.3 bln in 2M16 from USD 65.4 bln at the end of 2015, the Finance Ministry reported on April 5. The main reason was a 5.3% YTD decline in internal debt, or USD 1.2 bln, to USD 20.9 bln. External debt remains effectively flat YTD at USD 43.4 bln. The share of external liabilities increased to 67.5% of total state debt as of end-Febuary, compared to 66.3% at the end of 2015.

Alexander Paraschiy: The main factor in the decline was hryvnia devaluation of more than 10% to UAH 27/USD in February from nearly UAH 24/USD in early January. The Finance Ministry was actively issuing state bonds (UAH 15.6 bln) and local Eurobonds (USD 917 mln) during the period. However, that was reflected only in the dynamic of UAH-denominated figures. In particular, UAH-denominated internal debt even increased 6.8%, or by UAH 36.0 bln, in 2M16. Amid the unfolding political crisis, difficulties have emerged in projecting state debt dynamics. Initially, we assumed the arrival of an IMF tranche in 1Q16, yet it has yet to arrive, with little signs that it will come anytime soon. Against this backdrop, there is a high chance that Ukraine’s end-2016 public debt will be much lower than our forecast of USD 74.5 bln (90% of GDP).

Источник: Конкорд Капитал