Ukraine monetary base decreases 0.4% in March

Ukraine’s monetary base decreased 0.4% m/m in March (-2.6% YTD) compared to a 2.0% m/m decline in the prior month, according to a National Bank of Ukraine (NBU) report released on April 8. Money supply (M3) also fell 0.9% m/m in March (+1.3% YTD) compared to a 2.1% m/m increase in the prior month.

Alexander Paraschiy: The key factor in the contraction was a decline in gross international reserves by 5.7% to USD 12.7 bln from USD 13.4 bln in the prior month. Further accumulation of public funds also contributed to the downward dynamics. In particular, Treasury accumulations increased 25.1% to UAH 21.1 bln as of April 1, from UAH 16.8 bln a month ago.

In fact, the continued tendency with accumulating public funds, coupled with dubious prospects of gross reserves accumulation, makes us more cautious about projecting monetary base growth for the year. Thus far, we are lowering our monetary base forecast to 7.6% YTD for 2016.