Ukraine will probably post a “small” current-account surplus this year for the first time since 2004 as the recession cuts demand for imports, central bank Deputy Governor Oleksandr Savchenko said, Bloomberg reported.
“The current-account surplus will be below 1 percent of gross domestic product,” Savchenko said today in an interview in Kiev. “The reason is that imports are shrinking faster than exports.”
An economic contraction and a plunging hryvnia have damped demand for imported goods such as cars and equipment. The economy, which has expanded each year since 2000, probably contracted as much as 23 percent in the first quarter, President Viktor Yushchenko said on May 25.
The current-account deficit narrowed to $594 million in the first four months of the year, compared with $5.6 billion in the same period a year ago, the central bank said on May 25.
The eastern European nation secured a $16.4 billion loan from the International Monetary Fund in November to finance its current-account deficit, which widened to 7.1 percent of GDP last year, the biggest in at least a decade.
Ukraine’s currency lost more than 37 percent against the dollar last year as turmoil in global credit markets deterred investment in emerging markets. The hryvnia has clawed back 4.82 percent of that so far in 2009 as the central bank introduced new rules on the interbank currency market, changed reserve requirements for banks and implemented so-called “targeted auctions” for individuals and small business.
“I see a slight strengthening of the hryvnia until the end of the year,” Savchenko said. “If the currency is devalued too much, it’s also bad for exporters as they relax and then they aren’t competitive.”
Savchenko also said that “there is no problem for the government and big state-owned companies to repay their debts,” while the central bank is urging companies to restructure their loans.
