Ukraine gross reserves decline 3% in February

Ukraine’s gross international reserves declined 2.9%
m/m, or USD 0.6 bln, to USD 20.2 bln in February owing to debt payments and servicing
in foreign currency, the National Bank of Ukraine (NBU) reported on March 5.
Foreign currency outlays were partially compensated by foreign currency
purchases by the NBU on Ukraine’s ForEx.

Specifically, the debt payment and servicing in foreign
currency reached USD 1,285 mln (in the equivalent), including USD 838 mln on
the redemption and servicing of local Eurobonds and other foreign currency
debt. February’s repayments to IMF amounted to USD 448 mln.

These outlays were partially compensated by new local
Eurobond placements for USD 303 mln. In addition, international reserves during
February were replenished through the purchase of foreign currency by the NBU
at Ukraine’s ForEx. The net purchase of foreign currency amounted to USD 327
mln. The NBU also reported on the increased value of its security portfolio by
USD 57 mln (adjusted to market value and the currency exchange rate).

As of Feb. 1, Ukraine’s gross reserves amounted to 3.3
months of imports, the NBU said.

Evgeniya Akhtyrko: February’s
gross reserves statistics didn’t include foreign currency inflow related to a loan from Deutsche Bank for EUR 529 mln
attracted by the government on Feb. 28 under a guarantee of the World Bank.
These receipts helped to deal with March 1 payments covering USD 444 mln in
coupons on Eurobonds maturing in 2019-2027. On March 1, Ukraine also repaid
around USD 160 mln to the IMF.

By the end of March, Ukraine is also set to redeem USD
113.0 mln on local Eurobonds placed in February and to pay USD 111 mln on
coupons on Eurobonds maturing in 2032. The central bank is likely to contribute
to reserves replenishment, benefiting from the favorable situation on the
ForEx. At the same time, the government is likely to ease its recent policy of
attracting foreign currency with the placement of local Eurobonds. With all
these ins and outs, we expect March gross international reserves will be close
to February’s level.