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Ukraine's Finance Ministry is going to cut the nation's state debt to 40% of GDP vs 61% in late 2018. According to the country's Finance Minister Oksana Markarova, Kyiv "is again reducing debt compared with GDP, and this year it is less than 60%," adding that for 2020 the goal is to reduce public debt to 52% of GDP, and in two years to reach "even 40%".
7.0 FX
Soaring hryvnia value causing problems for Ukraine. Ukraine’s hryvnia has gained 15% in value YTD and that is causing problems for the export orientated economy. The hryvnia passed the UAH24 to the dollar mark on November 27, a level it hasn't seen since 2015.
Ukrainian president Volodymyr Zelenskiy met with representatives of the National Bank of Ukraine (NBU) on November 28 to discuss policy. Oleksiy Danilov, head of Ukraine’s National Security and Defence Council, was also invited to the meeting, according to Bloomberg sources.
The strengthening of the currency has been a boon for the central bank in its battle to bring down inflation. Consumer price inflation (CPI) has fallen steadily from over 20% in 2016 and higher in the crisis years of 2014-15, but was down to 6.5% in October after falling a whole percentage point in the last month.
That has allowed the NBU to end its tightening policy it was running last year and cut rates several times this year. The NBU slashed its key policy rate by lopping off a whole percentage point to bring the rate to a still very high 15.5% per annum on October 25.
However, the strong currency has impaired exports, especially in the metallurgical sector, one of Ukraine’s strong suits, which was already suffering from falling prices of iron and steel this year. Agricultural exports, which have grown to become a major export commodity, have also been affected.
Until now the central bank has resisted demands to intervene by buying foreign currency more actively, citing adherence to its policy of maintaining a flexible exchange rate. But the bank is under increasing pressure to loosen its fight against inflation and weaken the currency fro the sake of growth and exports.
In particular the NBU has been criticised by oligarch Igor Kolomoisky, who also owns major metallurgical businesses. The NBU issued its strongest statement yet on November 26 accusing Kolomoisky of launching a coordinated campaign of terror, intimidation and physical attacks on both the bank’s staff and its independence.
The volume of remittances by labour migrants to Ukraine this year is expected to exceed $11bn, deputy governor of the National Bank of Ukraine (NBU) Oleg Churiy said in a televised interview on November 27. The remittances of Ukrainian labourers abroad rose by 5% year-on-year to $5.5bn in January-June, the NBU reported on September 25. According to the NBU estimate, around half of remittances were transferred through informal channels, while the rest occurred via banking transfers and international money transfer systems. The January-June remittances accounted for about
43 UKRAINE Country Report December 201 www.intellinews.com
