Ukraine gross reserves increase 2.1% in April

The National Bank of Ukraine’s gross international reserves increased 2.1% (USD 0.51 bln) to USD 25.24 bln in April (or 2.9 months of future imports), according to NBU data released on May 16.

Alexander Paraschiy: As previously, external sovereign borrowings remain the key source of foreign reserves replenishment for the state bank. On April 10, Ukraine raised an extra USD 1.25 bln in Eurobonds to cover USD 1.3 bln in IMF redemptions due late April – early May. The April part of the IMF payment was only USD 400 mln, which ensured gross reserves growth through the month.

Still, the country’s C/A deficit is accumulating, sustaining pressure on gross reserves.  In view of the ongoing high demand for Ukrainian debt, we revise our estimate of gross foreign reserves up to USD 22.1 bln from USD 20.7 bln in 2013. We still maintain that the situation is unstable and any problem with securing more loans might turn out very badly for the gross reserves level.