Ukraine gross reserves fall to USD 15.2 bln in November

Ukraine’s gross international reserves fell 1.9% m/m to USD 15.2 bln at the end of November, National Bank Head Valeria Gontareva told a Nov. 28 meeting with bankers, according to the Interfax-Ukraine news agency. The central bank’s initial forecast of USD 17.5 bln by the year end will be revised since no one anticipates a fourth IMF wire of USD 1.3 bln, Gontareva said. “The situation is not critical but it might become a threat to financial stability by next year,” she said.  

Alexander Paraschiy: The announced reserves figure isn’t final since it came three days before the end of the month. Regardless, a declining trend is likely for November. This is merely the latest evidence that foreign currency inflow is scarce. The only source for replenishing reserves this year might be EUR 600 mln in macro-financial support from the EU (if parliament lifts a ban on timber exports). Given that November gross reserves will be lower than we estimated, reserves are likely to dip below our forecast of USD 16.0 bln by the end of December.

The prospects for gross reserves in 2017 are gloomy. It’s not clear when realistic cooperation with the IMF might resume, yet almost all projected growth in reserves in 2017 is based on the expectation of more loans arriving from the Fund (USD 5.3 bln are scheduled). We assume that IMF funding will be renewed at some point in 2017 and we project USD 21.4 bln in gross international reserves by the end of that year.