Ukraine expects 3% annual hryvnia depreciation in 2019-2021
12 July 2018
Ukraine’s Economy Ministry expects the Ukrainian
hryvnia exchange rate at UAH 30.7/USD by the end of 2021, the Interfax-Ukraine
news agency reported, citing the ministry’s annual three-year economic forecast
submitted to the July 11 Cabinet meeting. The ministry expects annual
depreciation not to exceed 3.2% in 2019-2021, while the exchange rate at the
end of 2018 is expected to be UAH 28.10-28.50/USD (vs. UAH 26.23/USD as of
today).
With this exchange rate, Ukraine’s GDP is expected at
USD 125.7 bln in 2018, USD 140.0 bln in 2019, USD 149.9 bln in 2020 and USD
163.6 bln in 2021 (vs. USD 112.1 bln in 2017). In real terms, Ukraine’s
economic growth will accelerate from 3.0% yoy in 2019 to 4.1% yoy in 2021.
The ministry projects government borrowing at UAH 215
bln in 2018, which is 7% lower than the amount assumed by the state budget. The
submitted forecast also assumes that natural gas prices for households will
increase 18% in 2018.
Evgeniya Akhtyrko: The
ministry’s forecast looks quite optimistic, assuming an IMF loan tranche will
be received, as well as other lending from IFIs, which in total should provide
up to USD 3.3 bln. State officials are still trying to reach an agreement on
natural gas prices at import parity, which would require hiking them significantly, a widely unpopular
move. Should the government fail in securing the IMF tranche, the ministry’s
economic forecast will be quite irrelevant.
