Business news from Ukraine

INTERNATIONAL RESERVES OF UKRAINE REACH $31.6 BLN

The international reserves of Ukraine as of September 1, 2021, according to preliminary data, amounted to $31.614 billion (in equivalent), which is 9.2% more than at the beginning of August this year ($28.951 billion) according to the data of the National Bank of Ukraine (NBU).
“As of September 1, 2021, Ukraine’s international reserves, according to preliminary data, amounted to $31.614 billion (in equivalent). This volume of reserves is a record over the past nine years … In August, the reserves increased by 9.2% due to, first of all, the receipt of funds in the amount of 1.928 billion special drawing rights (SDR) within the general allocation from the IMF,” the report says.
As the National Bank notes, the dynamics of the August reserves was affected by the operations of managing the state debt: the total volume of payments for servicing and repaying the state and state-guaranteed debt in foreign currency amounted to $ 188 million (in equivalent).
It is specified that $ 33.7 million was spent on servicing and redeeming external bonds, $ 18.2 million – on servicing and redeeming government domestic loan bonds, the rest – for fulfilling other government obligations in foreign currency.
At the same time, in August, foreign exchange receipts in favor of the government amounted to $ 8.8 million (in equivalent).
The dynamics of reserves was also influenced by the operations of the NBU in the interbank market. In particular, the central bank replenished its reserves by $ 348.3 million due to the fact that for most of August supply on the market prevailed over demand.
In addition, the dynamics of the indicator was influenced by the revaluation of financial instruments: last month their value decreased by $ 31.6 million (in equivalent), according to the National Bank.
The regulator noted as of September 1, 2021 the volume of international reserves covers 4.4 months of future imports – this is enough to fulfill the obligations of Ukraine, the current operations of the government and the NBU.
In addition, the NBU clarified that Ukraine’s net international reserves in August increased by $ 2.836 billion, or 15.3%, to $ 21.364 billion.

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NATIONAL BANK OF UKRAINE EXPECTS DECREASE IN UKRAINE’S PUBLIC DEBT TO 55.8% OF GDP

The public and guaranteed debt of Ukraine after growth last year from 50.3% of GDP to 60.8% of GDP in 2021 will decrease to 55.8% of GDP, this updated forecast is contained in the inflation report of the National Bank of Ukraine (NBU).
“Compliance with a balanced fiscal policy in the context of economic growth and low exchange rate volatility will allow to resume the decline in the level of government and government-guaranteed debt, as well as keep it below 60% of GDP,” the NBU said.
According to its estimates, in the first two months of 2021, the debt has already decreased to 58.4% of GDP, amounting to UAH 2.55 trillion in absolute terms (36.5% in national currency and 63.5% in foreign currency).
The National Bank said that in 2021 the government will still maintain a significant budget deficit (according to NBU estimates 4% of GDP, UAH 200.2 billion) to revive the economy and overcome the pandemic.
“However, in the future, in the context of sustainable economic growth, government incentives will decrease, which will gradually improve the debt position. Accordingly, in 2022-2023, the deficit is expected to decrease to 3% of GDP (UAH 165 billion in 2022 and UAH 181.9 billion in 2023),” the bank said in the report.
According to it, the National Bank does not expect financing of NJSC Naftogaz Ukrainy and additional capitalization of state-owned banks in the next three years. The volume of government guarantees, according to its estimates, will decrease from UAH 80 billion in 2021 to UAH 34.4 billion in 2022 and UAH 36.8 billion in 2023.

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NATIONAL BANK OF UKRAINE CLASSIFIES 13 BANKS AS CRITICAL INFRASTRUCTURE FACILITIES

The National Bank of Ukraine (NBU) has for the first time defined the list of critical infrastructure facilities in the banking system, which includes 13 banks, the press service of the regulator said on Friday.
The list includes PrivatBank, Oschadbank, Ukrgasbank, Ukreximbank, Raiffeisen Bank Aval, FUIB, Alfa Bank, OTP Bank, TAScombank, Universal Bank, UkrSibbank (all are based in Kyiv), Pivdenny Bank (Odesa) and A-Bank (Dnipro).
The list was approved by NBU Board decision No. 148 dated April 20, 2021 on critical infrastructure facilities in the banking system of Ukraine.
The facilities of critical infrastructure include banks, the stable operation of which ensures the stability of the banking system, it is essential for the economy and security of the state, the functioning of society, and which are of significant public interest. In particular, these are banks that are included in the list of systemically important banks, and banks in which the state directly or indirectly owns more than 75% of their charter capital.

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PRAVEX BANK TOPS LIST OF UNPROFITABLE UKRAINIAN BANKS IN JAN-FEB 2021

State-run PrivatBank topped the rating of the most profit-making Ukrainian banks in January-February 2021, having declared UAH 1.31 billion of net profit, while the largest loss was recorded by Pravex Bank – UAH 34.4 million.
According to the National Bank of Ukraine (NBU), the second position in the list of the most profitable banks was taken by Raiffeisen Bank Aval (UAH 758.705 million), the third by FUIB (UAH 676.133 million). Universal Bank with UAH 472.044 million) was fourth, and Alfa Bank with UAH 426.941 million was fifth.
According to the central bank, BTA Bank was second in terms of loss (UAH 7.68 million), the Ukrainian Bank for Reconstruction and Development (UBRD, UAH 6.671 million) third, AP Bank (UAH 6.389 million) fourth, and Unex Bank (UAH 4.682 million) fifth.
During this period 63 out of 73 banks operating in Ukraine saw profit.
According to the statistics of the National Bank, in terms of total assets, PrivatBank (UAH 561.062 billion) retained the first place in the rating in terms of total assets (UAH 561.062 billion), Oschadbank was second (UAH 279.702 billion), Ukreximbank (UAH 237.061 billion) was third, Ukrgasbank (UAH 149.524 billion) was fourth and Raiffeisen Bank Aval (UAH 118.33 billion) was fifth.

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National Bank of Ukraine allows individuals forward purchase of FX currency for hryvnia

The National Bank of Ukraine (NBU) has lifted the ban on the conduct of transactions by individuals as the forward purchase or sale of foreign currency, the purchase or sale of foreign exchange and bank metals on margin trading and the settlements in foreign currency to buy government securities denominated in foreign currency, the press service of the central bank said on Saturday.

The changes were approved by NBU Board resolution No. 3 dated January 15 posted on the regulator’s website. The document came into force on January 17.

According to it, the NBU also lifted the prohibition for legal entities to carry out transactions for the forward sale of foreign currency and the prohibition on banks’ swaps with resident individuals, if the first part of such an operation involves the sale of foreign currency or bank metals to the client.

In addition, the National Bank allowed banks and non-bank financial institutions to buy foreign currency from the population for non-cash funds in hryvnia through self-service terminals and approved the rules of conducting relevant operations. In particular, after the sale of currency through payment devices, hryvnia funds will be credited to the personal current accounts of individuals.

In order to promote the use of digital analogs instead of paper documents, the National Bank clarified the requirements for the implementation of transfers of funds in foreign currency by individuals outside Ukraine and the receipt of such transfers from abroad.

In particular, the regulator added the ability for individuals to use digital passports in the Diia mobile application when carrying out these operations, where information is displayed in electronic form, which contains an ID card and a biometric passport of a citizen of Ukraine.

According to the estimates of the National Bank, the easing of these requirements will ensure the implementation of further steps on the path of currency liberalization, as well as contribute to the expansion of opportunities for businesses and individuals to hedge currency risks, further develop new services provided by authorized institutions in the field of currency exchange transactions and the use of digital documents in foreign exchange transactions.

NATIONAL BANK OF UKRAINE RETAINS REFINANCING RATE

The Board of the National Bank of Ukraine has decided to keep its key policy rate at 6% per annum.
The NBU expects inflation, which increased to 3.8% in November, into the target corridor of 5% +/- 1 pp at the end of the year and further growth in consumer prices in the following months, the central bank said on its website on Thursday.
According to the NBU estimates, the quarantine restrictions announced by the government for January 2021 will not have much influence on economic activity, consumer demand, and thus on inflation.
At the same time, balanced monetary and fiscal policies will not only contribute to the resumption of economic growth, but also will maintain inflation at moderate levels.
“Cooperation with the IMF remains fundamental for the recovery of Ukraine’s economy. Financing provided by the IMF and other international partners is crucial for the planned budgetary spending. Without this support, the fiscal impulse required to revive the economy will be much smaller, and the recovery will take longer,” the message reads.
Ukraine’s fulfillment of its obligations under agreements with international lenders will unblock next tranches of official financing. This will reduce interest rates on state borrowing on the domestic and foreign markets.
The NBU added that a rise in coronavirus cases and the imposition of stricter quarantine measures to overcome the pandemic remain the key risks to macrofinancial stability. This could result in gloomier consumer sentiment and subdued domestic demand, which would depress economic activity and restrain inflation.
It is indicated that if a negative pandemic scenario is implemented, which will restrain consumer demand and slow down economic growth in general, the National Bank will be able to provide the economy with an additional monetary impulse.
“Conversely, the materialization of the adverse scenario will restrain consumer demand, slowing overall economic growth. Under such conditions, inflationary pressures will be weaker, enabling the NBU to give the economy additional monetary impetus for growth,” the release says.
A summary of the discussion by Monetary Policy Committee members that preceded the approval of this decision will be published on 21 December 2020. The next monetary policy meeting of the NBU Board will be held on 21 January 2021, according to the confirmed and published schedule, the regulator reminds.

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