Ukraine gross reserves surge 21% in 2017, but drop 0.5% in December

As of Jan. 1, Ukraine’s gross international reserves
reached USD 18.8 bln, increasing 21% yoy, the National Bank of Ukraine (NBU) reported
on Jan. 5. The growth was mostly due to International Monetary Fund (IMF)
financing of USD 1.0 bln and the NBU’s buying of USD 1.3 bln on ForEx.

Meanwhile, reserves declined 0.5% in December. The
main spending included the repayment and servicing of domestic debt (USD 423.6
mln) and reimbursement to the IMF (USD 161.8 mln). On ForEx, the NBU sold more
currency than it bought, so the net sale of currency totaled USD 182.5 mln.

By the end of 2017, gross international reserves covered
3.6 months of future imports.

Evgeniya Akhtyrko: Besides IMF
financing and ForEx operations there were other sources of reserves growth in
2017. The net inflow of Ukraine’s Eurobond placement reached USD 1.32 bn.
Moreover, the EU granted EUR 600 mln under the macro financial assistance
program.

The reserve amount for YE2017 turned out to be
better than our estimate of USD 18.6 bln. However, our expectations regarding the downward trend in December were
correct. Our current forecast for YE2018 gross reserves stays at USD 22.4 bln.
We expect that Ukraine will renew its cooperation with IMF and will receive USD
1 bln under EFF program while the Eurobond placement will bring another USD 1
bln. A new EUR 600 mln tranche of EU macro financial assistance is also
expected.