Page 42 - UKRRptAug22

Ukraine’s international reserves shrank to the lowest level in more than two years as a blockade on exports of grains and metals starves the already war-ravaged economy of crucial revenue from abroad.
The central bank’s stockpile of foreign currencies and gold fell by 9% from the previous month in June to $22.76bn, data showed Thursday. The central bank did not provide the conversion of the level of reserves to the number of months of imports deemed by economists to be critical.
In response to Russia’s attack, exports are sinking and military spending is surging, swelling the budget deficit despite large-scale financial assistance from Western donors.
That’s forced the central bank to purchase 225bn hryvnia ($7.6bn) of government bonds, prompting warnings that printing too much money risks hyperinflation.
“Nowadays a significant pressure on reserves is being caused by the National Bank’s financing of the budget. central bank Deputy Governor Serhiy Nikolaychuk said by email to Bloomberg News Thursday. “If there were political will, this financing could be minimized and even stopped via redistribution of the country’s financial flows, and we believe it needs to be done.” Reserves “still remain at sufficient level,” helped by foreign financial aid, he said. The government expects to get more than $20bn from its backer nations by year-end.
42 UKRAINE Country Report XXXX 2018 www.intellinews.com