Ukraine international reserves dip 0.6% in January

Ukraine’s gross international reserves dipped by 0.6% m/m (by USD 94 mln) in January  down to USD 15.4 bln (3.4 months of future imports). USD 78 mln of net ForEx interventions as well as USD 138 mln allocated to debt servicing were the main reasons for the gross international reserves decline through the month.

Alexander Paraschiy: The decline in gross reserves is not surprising. Neither the IMF wire nor the EUR 600 mln anticipated from the EU were realized in January. We expect the situation to improve over the upcoming months. In particular, we anticipate in February the next tranche from the IMF (at least USD 1.0 bln) to be finally approved. At least the authorities and the IMF officials look positive about the funding prospects. Also, Finance Minister Oleksandr Danylyuk has been talking about a potential sovereign Eurobond issue in 2017. We expect some extra funding from IFIs and at least one more wire of a macro-financial loan from the EU. On top of that, we are positive about the gradual recovery of investment flows this year. We project gross international reserves increasing up to USD 19.5 bln (4.3 months of imports) by the end of 2017.