Ukraine monetary base declines 3% in March

Ukraine’s monetary
base decreased 2.9% m/m (-1.5% YTD), or UAH 11.6 bln in March, sliding after a 3.2% m/m
increase in the prior month, the National Bank of Ukraine (NBU) stated in a
provisionary report on Apr. 11. Meanwhile, the decline in money supply
slowed down to a decrease of 0.1% m/m (-3.3% YTD) after a 0.5% m/m drop in February.

Evgeniya Akhtyrko:  The drop in gross international
reserves (by 1.2% or USD 219 mln), among others, on the back of March
payments on Ukraine’s Eurobond servicing (USD 562 mln) is seen as the main
reason for the monetary base decline last month. The increase in public
spending (treasury residuals dropped by 15.7% m/m down to UAH 8.3 bln from UAH
9.9 bln in the prior month) was not enough to offset this decline. 
Volatility in money formation is not something unusual for Ukraine. Meanwhile,
our view on the monetary base tendency for this year remains unchanged. We
expect 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.