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5.2.2 Current account dynamics
In 2021, the current account will record a slight deficit, which will widen noticeably in 2022 – 2023 on the back of rising domestic demand and less favorable terms of trade.
The current account is expected to return to a slight deficit of 0.8% of GDP in 2021, propelled by higher domestic demand and the gradual revival of international tourism.
In 2022 – 2023, the current account deficit will widen noticeably, mainly due to less favorable terms of trade for exporters of agricultural and metallurgical products and the expected drop in earnings from gas transit. The deficit will also be driven by continued growth in consumer and investment imports, fueled by the complete recovery of the global and Ukrainian economies from the coronavirus crisis.
5.2.3 Gross international reserves
Ukraine’s gross international reserves amounted to $27.04bn as of end-March, the National Bank (NBU) reported on April 7. Gross reserves cover 4.3 months of future imports, the NBU stated.
The reserves decreased 5% month on month due to large debt servicing outlays. In particular, the government spent $571mn on coupons for international Eurobonds and $325mn on the repayment and servicing of local Eurobonds as well as paying $508mn to the IMF. This was partially offset by $474mn in proceeds from the placement of local Eurobonds. Another driver of the decline was the $250mn decrease in market value of financial instruments
34 UKRAINE Country Report May 2021 www.intellinews.com