Ukraine treasury residuals fall 19.1% in October

Ukraine’s budget residuals at the State Treasury’s unified account fell 19.1% to UAH 48.6 bln as of Nov. 1 from UAH 60.0 bln a month ago, the State Treasury reported on Nov. 1. The highest historical level of Treasury residuals was recorded on Sept. 1, 2017 with UAH 63.2 bln in cash.

Alexander Paraschiy: The risk of cash overhang at the Treasury accounts has been widely discussed in Kyiv and we see that authorities are finally trying to address the issue. Cash accumulation is still impressive (1.8% of GDP) compared to previous years. However, if the Finance Ministry keeps pushing state bodies to spend more now, there is still a chance to avoid the typical massive hryvnia injection into the economy in the last days of the year.

This needs to be avoided because in the last two years, the surge in year-end spending triggered sharp hryvnia depreciation. If this cash overhang isn’t dealt with by the end of December, we can expect another sharp drop in the hryvnia to kick off the new year.