Accounting Chamber explains budget losses from hryvnia strengthening

Chairman of the Accounting Chamber of Ukraine Valeriy Patskan says this year's 9% rise of the hryvnia, Ukraine's national currency, against the U.S. dollar resulted in the failure to fulfill the national budget revenue plan by UAH 9.2 billion (US$364.8 million) due to the deviation of the hryvnia official rate from the figure laid down in the 2019 national budget.

Almost 40% of the national budget revenue is calculated using the hryvnia exchange rate to the U.S. dollar or euro. Therefore, it is very important to make a quality forecast for the hryvnia rate to develop a draft national budget for 2020, the Chamber's press service said on August 30, referring to Patskan.

It is noted that the negative trade balance will increase due to the strengthening of the national currency.

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"Strengthening of the hryvnia will stimulate growth in imports and curb exports of Ukrainian goods and services. At the same time, it will curb the rise in prices, primarily of imported goods," the press service quoted Patskan as saying.

According to the official, the hryvnia exchange rate will be affected by the situation in global commodity markets of the main staples of Ukrainian exports and critical imports, economic situation in countries with a significant number of Ukrainian labor migrants, and the situation in the domestic borrowing market.

"That is why it's very important to update the forecast for the hryvnia since the next year's budget will be based on it. The future government must also promptly draft the national budget for the upcoming year, and a budget declaration for three years," Patskan added.

As UNIAN reported earlier, the deficit of the Ukrainian national budget's general fund in January-July 2019 was estimated at UAH 1.1 billion, or US$44.6 million.

The hryvnia in early July slid below "psychological" mark of UAH 26 per dollar, with its further strengthening.