Ukraine revises budget spending based on UAH 12/USD rate

Ukraine’s Finance Ministry has adjusted its budget spending based on a UAH 12/USD exchange rate, revised from UAH 10.8/USD, Finance Minister Oleksandr Shlapak stated on July 21, according to the Interfax-Ukraine news agency. “We need to increase budget spending on debt servicing and also for those colleagues who are tied to the difference in exchange rates,” Shlapak commented. “That’s our diplomats, military attachés and others.”

Alexander Paraschiy: The decision is quite logical and inevitable given that the hryvnia exchange rate has been floating near the UAH 12/USD mark since April and external liabilities have been covered in their current exchange rate. Yet we still see appreciation potential for the hryvnia based on fundamental economic trends, though it’s not clear when they will be more influential than political factors, in light of the ongoing war in the east. We see some chances for the budget to save some money should the situation stabilizes itself, prompting the hryvnia to improve.