Ukraine gross reserves jump 13.6% m/m in April

Ukraine’s gross international reserves jumped 13.6%, or USD 2.1 bln, to USD 17.2 bln in April, the National Bank of Ukraine (NBU) reported on May 5. The main sources were a USD 1 bln wire from the IMF, a EUR 0.6 bln loan from the EU and USD 0.4 bln in net dollar purchases at the ForEx. Authorities also spent USD 68 mln on debt servicing in April.  The current level of reserves covers 3.6 months of future imports.

Alexander Paraschiy: April was a fruitful month for gross reserves. Two large wires from international donors and active purchases at the ForEx were events we had not seen for a while. At the same time, we are surprised the figure didn’t include USD 1.1 to 1.5 bln in corrupt funds confiscated from ex-President Yanukovych and his close aides that was announced in late April. We will probably learn later where the confiscated funds were allocated.

Despite the impressive gross reserves jump in April, we remain concerned with further reserves accumulation. Metal prices have started falling, private investments are not on the horizon while IMF funding could be delayed beyond June. We can hardly expect soon parliamentary approval of the farming land and pension reforms that are being requested by the IMF, though some legislation will ultimately emerge in some form.

We are keeping our projection of gross reserves at USD 19.5 bln (4.0 months of imports), anticipating at least one more wire from the IMF till the year end.