NBU says Ukraine's international reserves may grow in 2018 despite debt repayment

The National Bank of Ukraine (NBU) predicts growth in Ukraine's international reserves in 2018 as the costs of repayment of the foreign exchange state debt of US$7.4 billion will be excessively compensated by the expected foreign exchange earnings.

The regulator believes that Ukraine's international reserves will at the end of 2018 grow by 9%, or $ 1.7 billion, from current $18.8 billion to $20.5 billion.

"Further cooperation with the International Monetary Fund will play an important role as the NBU predicts it will receive a $2 billion disbursement this year. In addition, the government is expected to attract $1.2 billion from other international financial organizations," the central bank told UNIAN.

According to the NBU forecasts, other sources of the reserves replenishment will be the funds received from the placement of eurobonds worth $2.5 billion and the net purchase by the National Bank of surplus currency in the interbank forex market under favorable conditions.

Read alsoEBRD envoy tells why Ukraine sees only four IMF tranches"Further dynamics of growth in international reserves will significantly depend on the success of the Ukrainian reforms, which are the key to further support from international partners," the NBU said.

In 2018-2020, the government and NBU are to pay over $16 billion in foreign debts, while the peak of payments is set for 2019-2020.

"The National Bank hopes that Ukraine will be able to fulfill its obligations under the cooperation program with the IMF and pass the next two years without a significant reduction in international reserves," the regulator said.

As UNIAN reported, Ukraine's total international reserves as of January 1, 2018, amounted to $18.808 billion, which was 21% up from the figure reported as of January 2017.

In March 2015, the IMF approved a four-year EFF loan program for Ukraine under which $17.5 billion will be disbursed. Ukraine has already received four disbursements from the Fund to the tune of $8.7 billion. The program expires in March 2019.

On January 26, Ukrainian President Petro Poroshenko announced that the country had fulfilled 80% of the IMF requirements, stressing he expected to receive the fifth disbursement in April 2018.

Read alsoIMF representative predicts Ukraine's economy may grow by 3%-3.5% in 2018The IMF says that to receive the fifth tranche, Ukraine needs to ensure that the pension reform is consistent with the objectives of cooperation, as well as to pass a law on privatization, bring gas tariffs in line with import parity, create an anti-corruption court, and adopt a budget for 2018 with a deficit of no more than 2.5% of GDP.