Revenues from exports and labor migrants are lower than defense spending
In June, international reserves of Ukraine decreased by 9% . As of July 1, 2022, according to preliminary data, they amounted to $22,756.9 million, according to the National Bank of Ukraine.
According to the NBU's message, the intensification of the flow of international aid to Ukraine made it possible to partially compensate sale of currency on the interbank foreign exchange market.
The regulator determined a number of factors that affected the dynamics of international reserves in June.
Firstly, transactions NBU on the interbank foreign exchange market. Demand for currency exceeds supply
The National Bank sold $3,987.3 million on the foreign exchange market and bought back $31 million to reserves. The balance of NBU interventions according to the results of June is negative and amounts to $3,956.3 million.
The regulator sold currency from reserves through significant demand for it, compared to the supply. Thus, revenues from the export of goods and services and from labor migrants were lower than the costs of defense, imports and settlements with international payment systems. The latter are carried out taking into account the expenses of citizens from hryvnia payment cards abroad.
The monetization of the budget deficit by the NBU also caused additional demand on the foreign exchange market. Most of the financing received by the government in hryvnia gradually entered the foreign exchange market, which increased the demand for foreign currency.
Read also: Despite the weakness of the hryvnia, the exchange rate will not fall by more than 40 per dollar – the expert explained why
Secondly, operations on the management of the state debt. Payments amounted to $833.6 million.
Foreign currency receipts to the accounts of the Government of Ukraine at the NBU amounted to $2,763.0 million. In particular, $967.4 million came from the World Bank, $779.0 million from the Government of Canada, $479.4 million from the Japan International Cooperation Agency, and $354, 2 million – from the placement of foreign currency domestic government bonds (OVDP).
On the other hand, the total amount of payments for servicing and repaying the state debt in foreign currency amounted to $833.6 million. Of this amount, $672.1 million is directed to servicing and repayment of OVDP bonds, $70.1 million – for servicing external state loans, and the rest of the amount – for settlements with other creditors.
In addition, the National Bank paid $166.2 million to the International Monetary Fund.
Thirdly – revaluation of financial instruments due to changes in market value and exchange rates.
Last month, their value decreased by $152.2 million.
Read also: Changes for the importer. What should we prepare for?
Let us remind you that the National Bank of Ukraine predicts a drop in GDP by more than a third.
