Page 32 - bne IntelliNews Country Report: Ukraine Dec17

Kurier government newspaper. The country's Interdepartmental Commission for International Trade made the relevant decision on October 25 following studying the complaint of Russol-Ukraine based in the Donetsk region. According to the agency, the share of salt imports from Belarus with respect to consumption increased by 3% in 2016 year-on-year, while the share of imports from Belarus relative to Russol-Ukraine production increased by 10%. The volume of production by the company for this period decreased by 3% y/y, domestic sales increased by 4% y/y, profit decreased by 72% y/y in US dollar terms, profitability of products by 73%. y/y.
5.2.2 Current account dynamics
The C/A balance dipped in September on a $0.5bn sovereign Eurobond coupon payment , but the 9M17 tally widened by only $0.3bn y/y to $3.0bn. Growth in imports of goods marginally outpaced exports (21.9% vs. 20.7%) as Ukraine shifted the purchase of natural gas (the country’s largest single import item) for the winter season to 2Q and 3Q from last year’s 4Q purchases.
The C/A deficit is projected at 3.5%-4.0% of 2017E GDP , broadly unchanged from 2016. While heavy consumer and investment imports will keep imports growing in 2018, the increase should be offset by higher sales from the recovering industrial sector.
Financial account inflows spiked by $1.3bn on a Eurobond placement in September , representing the portion of proceeds exceeding the $1.7bn used to refinance debt maturing in 2019-2020.
The FX market has stabilized after the hryvnia’s 3% depreciation over the third quarter and October . The NBU intervened a few times to signal its support, but the central bank remains broadly committed to the flexible exchange rate policy.
The prospects for a continuation of lending under the IMF program look slim over the next half-year . The government’s credibility has been heavily undermined after it failed to hike household gas prices in October. Even if gas prices are raised next spring after the end of the heating season, the IMF is unlikely to be satisfied and is likely to request a long list of prior actions rather than focus on structural benchmarks, which the government has frequently ignored.
32 UKRAINE Country Report December 2017 www.intellinews.com