Ukraine gross reserves decline 3% in May
10 June 2013
Ukraine’s gross international reserves declined 2.8% (USD 701 mln) to USD 24.5 bln in May (2.8 months of future imports), according to NBU data released on June 7.
Alexander Paraschiy: Gross reserves fell because the government didn’t make a Eurobonds placement during the month, while at the same time it made a significant external debt redemption (USD 968 mln was paid back to the IMF). Amidst a high trade deficit, the state has been relying on state and quasi-state borrowing to grow gross reserves this year.
However, in May for some reason MinFin was unable to raise more money to cover the currency deficit, which resulted in a substantial gross reserves contraction (now at the level of December 2012).
This trend is in line with our previous forecast. We still expect that the Cabinet will be in a position to only partially cover the currency deficit (which we estimate at USD 4.0 – 4.5 bln till the year’s end) and gross reserves will decease to USD 22 bln in 2013.
