Ukraine monetary base increases 5% in April

Ukraine’s monetary base increased 4.8% m/m (3.3% YTD)
in April, or UAH 19.0 bln, recovering after a 2.9% m/m drop in the prior month,
the National Bank of Ukraine (NBU) stated in a provisional report on May 11.
Meanwhile, money supply increased 1.9% m/m (-1.5% YTD) after a 0.1% m/m slide
in March.

Evgeniya Akhtyrko: The growth of gross international reserves,
which was mostly due to the central bank’s currency purchase of USD 302.7 mln
on the ForEx, was the main reason for April’s monetary base growth. Rising
public spending also played a role as treasury residuals dropped by 33.3% m/m
to UAH 5.5 bln from UAH 8.3 bln in the prior month.

We project a 6.1% YTD monetary base increase in
2018 (vs. 4.6% YTD in 2017) on the back of limited budget deficit financing and
potential gross reserves accumulation. However, the monetary base indicator is
likely to show high volatility month-to-month amid overall economic weakness.