Ukraine central bank lowers gross reserves forecast

The National Bank of Ukraine (NBU) has lowered its gross international reserves forecast to USD 13 bln from USD 15-18 bln estimated previously, the Interfax-Ukraine news agency reported on Dec. 1. The main reason was the delayed USD 1.7 bln IMF tranche under the Extended Fund Facility (EFF) program and subsequent delays with all other external funding. “We expect gross international reserves to double compared to the year start and exceed USD 13 bln,” said Valeria Gontareva, the head of the NBU told the managers of 40 largest Ukrainian banks in Dec. 1 meeting. “This size of gross international reserves is sufficient since it covers more than three months of imports,” said Gontareva.

Alexander Paraschiy: The latest IMF mission concluded its work on Nov. 20 and left Kyiv, confirming that the next tranche won’t arrive soon. Approval of the 2016 budget was set as a critical requirement for further funding, with expectations for heated debates over the spending plan, as well as the Finance Ministry’s tax reform proposal. Given that only a few weeks are left till the year end, time is extremely tight for a smooth budget approval, let alone any prolonged discussions. Thus the NBU has realized that gross reserves will remain almost unchanged near USD 13 bln. The NBU outlook is fully in line with our earlier estimates.