Ukraine monetary base dips 0.1% m/m in February

Ukraine’s monetary base stabilized in February with only a 0.1% m/m decline (-5.3% YTD) after a 5.1% m/m drop in the prior month, the National Bank of Ukraine (NBU) reported on March 10. Money supply also dropped -0.6% m/m (-3.9% YTD) compared to -3.3% m/m in January.

Alexander Paraschiy: Monetary aggregates in February were almost unchanged as hryvnia injections through ForEx interventions were quite modest at USD 80.9 mln and the NBU abstained from state bond purchases (instead, the NBU’s state bond portfolio decreased by UAH 1.3 bln in February). 

Treasury statistics are delayed and we do not have a clear picture of what happened with its accumulations. But the monetary base numbers indicate that public spending remains low amid fast revenue growth. 

Against the backdrop of such stability with money formation, we are keeping our previous forecast unchanged at 8.6% YTD monetary base growth in 2017, anticipating resumed growth on the back of stronger budget spending and more active NBU purchases of state bonds in mid-2017.