Ukraine gross foreign reserves fall 3.4% in April

Ukraine’s gross international reserves fell 3.4%, or USD 0.34 bln, to USD 9.63 bln, according to a National Bank of Ukraine (NBU) report released on May 7. The main factors were USD 737 mln in external redemptions (including USD 218 mln for the IMF), as well as USD 240 mln in NBU’s foreign currency sale (including USD 140 mln for Naftogaz). The National Bank’s USD 158 mln foreign currency purchase at the ForEx and a EUR 250 mln loan from the EU prevented gross reserves from falling deeper. 

Alexander Paraschiy: The relatively modest gross reserves decline in April is a very good sign that means external trade is improving and the situation at the ForEx has stabilized for the moment. We anticipate gross international reserves to fluctuate close to the USD 10 bln mark over the upcoming month in light of the expected placement of USD 1 bln in Eurobonds under U.S. state guarantees in May and EUR 600 mln debt tranche from the EU expected in the summer.  

Then starting September, economic stability will depend on “debt operation” of Finance Minisrty and progress in gaining another IMF tranche. Even without debt restructuring, we see gross international reserves near USD 11.5 bln (2.7 months of imports) by the ned of 2015. Yet success in sovereign debt payment rescheduling might boost gross reserves to USD 15 bln (3.5 months of imports).