The independent and professionally governed National Bank of Ukraine (NBU) is critical for macro-financial support from the European Union and other international partners, Head of the EU Delegation to Ukraine Matti Maasikas has said.
“A strong, independent and professionally run NBU is critical to Ukraine’s financial stability, banking sector reform, investment, economic development to benefit Ukraine’s citizens, and macro-financial support from the EU and other international partners,” he wrote on Twitter on Thursday.
The National Bank of Ukraine (NBU) expects a grain harvest in 2020 at the level of 70 million tonnes instead of the projected 70-72 million tonnes, Deputy Governor of the NBU Dmytro Sologub has said.
“We predicted that Ukraine will harvest 70-72 million tonnes of grain. Given the rather significant revision of data on the harvest of early grains (wheat and barley) downward compared to the recent statistics, at the moment we expect about 70 million tonnes,” he said in an exclusive interview with the Interfax-Ukraine agency.
The National Bank of Ukraine (NBU) expects an actual budget deficit in 2020 at the level of 6-6.5% of GDP instead of the 7.5% foreseen in the forecast, Deputy Governor of the NBU Dmytro Sologub has said.
“This year’s budget deficit is set at 7.5% of GDP. This is absolutely correct from the countercyclical point of view. But, apparently, the actual deficit will be lower… We estimate that the budget deficit will be around 6 -6.5% of GDP,” he said in an interview with Interfax-Ukraine.
According to him, the budget deficit fell below the forecast due to the strong underfunding of existing expenses. “Catching up on them in recent months will not be easy given the funding opportunities,” he said.
The Board of the National Bank of Ukraine (NBU) decided to keep the key policy rate unchanged at 6%, the central bank said on its website on Thursday.
“The NBU Board has decided to keep its key policy rate at 6% per annum. Maintaining a loose monetary policy will support economic recovery amid moderate inflation and elevated uncertainty over how the pandemic is going to spread in Ukraine and the world,” the central bank said.
The NBU said that in July–August, inflation was below the target range of 5% ± 1 pp. The dynamics of core inflation were subdued.
The revival in consumer demand and the rise in fuel and natural gas prices in line with global market trends were offset by seasonal adjustments in raw food prices, the regulator said.
The central bank said that future movements in inflation will depend on how fast the economy recovers. Data on imports, the retail trade, and household expenditures on domestic tourism, real estate, and cars indicate a further recovery in consumer demand, which is likely to continue in the coming months.
“The NBU’s monetary policy easing cycle and the government’s fiscal stimulus, including changes in social standards, will support this trend,” the central bank said.
At the same time, energy prices will continue to increase as the global economy gradually recovers from the coronavirus crisis. The statistical effect of the low comparison base formed in the final months of last year will make a significant contribution to the overall rate of inflation. All of this paves the way for inflation to enter the target range by the end of the year.
According to the press release, the primary assumption behind the NBU Board’s decisions remains that Ukraine will continue to cooperate with the International Monetary Fund (IMF).
“This cooperation is important not only in terms of financing the state budget deficit, but also from the perspective of receiving support from other international partners and investors. Funds from these sources will go to finance anti-coronavirus measures and infrastructure projects, which will help jump-start the still weak investment activity,” the NBU said.
As before, a longer-lasting coronavirus pandemic, the further spread of the disease and stricter quarantine measures remain the key risks to macrofinancial stability, according to the press release.
“The increase in the number of coronavirus cases in Ukraine seen in recent months has not affected the pace of economic recovery. Nevertheless, a new wave of COVID-19 could restrain consumer demand and slow the recovery in domestic-market-oriented sectors, especially the services sector,” the regulator said.
According to the report, other risks also remain significant. They include: the negative impact of certain court rulings on macrofinancial stability; an escalation of the military conflict in eastern Ukraine or on the country’s borders; and the higher volatility of global food prices, driven by global climate change and the risk of stronger protectionist measures.
“Given the above balance of risks and the steady trend towards a recovery in consumer demand, the NBU Board kept the key policy rate unchanged, at 6%,” the central bank said.
The regulator said that the fact that the key policy rate is being kept below its neutral level shows that monetary policy is expansionary. The policy also leaves enough room for further interest rate cuts in the economy.
Previous key policy rate cuts are continuing to be transmitted to market rates. More specifically, interest rates on hryvnia domestic government debt securities and hryvnia deposits are at record lows. Loan rates are also continuing to fall.
According to the report, under current circumstances, the key policy rate of 6% is aimed at keeping the balance between maintaining moderate inflation and stimulating the economy. However, if the adverse impact of the coronavirus pandemic on domestic demand and business activity increases, the NBU will be ready to give the economy additional impetus for growth.
Conversely, the NBU could also deploy monetary policy tools to respond to the likely increase in inflation risks in 2021.
The National Bank of Ukraine (NBU) plans to reduce the number of coins to six and the number of banknotes also to six by autumn 2023, Deputy NBU Governor Oleksiy Shaban has said.
“We see that in two years there will be six coins and six bills,” he said during a press briefing in Kyiv on Wednesday.
Currently, there are banknotes in circulation in Ukraine in denominations of UAH 1, UAH 2, UAH 5, UAH 10, UAH 20, UAH 50, UAH 100, UAH 200, UAH 500 and UAH 1000 and coins in denominations of 10, 25 (until October 1, 2020) and 50 kopecks and UAH 1, UAH 2, UAH 5 and UAH 10.
State-controlled bank PrivatBank in January-July 2020 continues to top the list of profitable Ukrainian banks with a financial result of UAH 16.2 billion, while the largest loss since April 2020 has been recorded by state-owned Ukreximbank (UAH 2.24 billion), according to data posted on the website of the National Bank of Ukraine (NBU).
According to the report, the second position in the list of the most profitable Ukrainian banks continued to be occupied by Oschadbank (UAH 4.32 billion), the third by Raiffeisen Bank Aval (UAH 2.46 billion). The fourth is still FUIB (UAH 1.5 billion), the fifth is OTP Bank (UAH 908.94 million), which climbed two steps, having received UAH 319.78 million of net profit in July.
In terms of losses in July, the list did not change: in the seven months of 2020, Prominvestbank ranked second (PIB, UAH 330.93 million), Credit Dnipro Bank ranked third (UAH 184.42 million), Pravex Bank ranked fourth (UAH 99.86 million), BTA Bank ranked fifth (UAH 67.17 million), according to the central bank’s statements.
In the seven months of 2020, solvent banks in Ukraine received UAH 28.39 billion of net profit, which is 23% less than in the same period of 2019 (UAH 36.73 billion).
During this period, 58 out of 75 banks operating in Ukraine were profitable, according to the NBU data.
According to the regulator’s statistics, in the seven months of 2020 in terms of total assets PrivatBank retained the first place in the rating (UAH 585.21 billion), Oschadbank ranked second (UAH 275.82 billion), Ukreximbank ranked third (UAH 239.05 billion), Ukrgasbank ranked fourth (UAH 163.13 billion), and Raiffeisen Bank Aval ranked fifth (UAH 104.17 billion).
