Ukraine's international reserves are rapidly decreasing: what's the reason?
Ukraine's international reserves decreased by 7.9% in May.
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NBU building / Photo: UNIAN
As of June 1, 2024, Ukraine's international reserves, according to preliminary data, amounted to USD 39,033.8 million. In May, they decreased by 7.9%.
This was reported by the press service of the NBU.
This dynamic is due to the NBU's foreign exchange interventions to maintain currency stability and the country's foreign currency debt payments, which were partially offset by proceeds from the placement of foreign currency government bonds (FX-denominated OVDP) and support from international partners.
Several factors influenced the dynamics of international reserves throughout May 2024.
Firstly, the operations of the National Bank on Ukraine's foreign exchange market.
According to balance data, the National Bank sold $3,087.0 million USD on the foreign exchange market and purchased $11.1 million USD for the reserves. Therefore, the net foreign currency sales by the NBU in May amounted to $3,075.9 million USD, increasing compared to April. This was due to rising demand in the foreign exchange market, primarily driven by increased government spending due to the regular inflow of external aid in March and April.
Secondly, inflows to the government and payments for servicing and repaying public debt.
The government's foreign currency accounts at the National Bank received $143.1 million USD. This included:
- $123.1 million USD from the placement of FX-denominated OVDP;
- $20.0 million USD from the World Bank.
Payments for servicing and repaying foreign currency public debt amounted to $412.3 million USD, including:
- $309.1 million USD for servicing and repaying FX-denominated OVDP;
- $42.9 million USD for servicing and repaying debt to the EIB (European Investment Bank);
- $30.7 million USD for servicing and repaying debt to the EBRD (European Bank for Reconstruction and Development);
- $21.3 million USD for servicing and repaying debt to the World Bank;
- $8.3 million USD for servicing debt to other international creditors.
Additionally, Ukraine paid $240.8 million USD to the International Monetary Fund (IMF).
Thirdly, the revaluation of financial instruments (due to changes in market value and exchange rates).
In May, the value of financial instruments increased by $216.1 million USD due to revaluation.
The current level of international reserves covers 5.1 months of future imports.
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