NBU buys $1 bln on market in past 4 months - Gontareva
The stabilization of the situation on the financial market and eliminating the imbalance of the current account has allowed the National Bank of Ukraine (NBU), while preserving the flexible exchange rate policy, to buy over the past four months $1 billion dollars for its net foreign exchange reserves, NBU Governor Valeriya Gontareva has said.
"The national JSC Naftogaz Ukrainy also started to buy from the market and bought already about $0.5 billion dollars to pay for the gas contracts. For the first time in over maybe past ten years Naftogaz bought something from the market," Gontareva said during a video conference at the Ukrainian Investment Day event organized by Concorde Capital in New York on Friday.
She recalled that last year the National Bank sold more than $8 billion to Naftogaz to pay for gas imports, to repay the eurobonds, and to repay the arrears to the Russian gas company Gazprom.
"That is why I think it is a real revolution here, and we are forming a stable environment via buying currency to support our reserves," the NBU governor said.
Gontareva noted that the main indicator for the bank is the current account balance, which now "is more or less balanced," its deficit being around $300 million.
At the same time, the NBU governor said that the central bank can always intervene if such need arises or in case of emergency.
Commenting on the creditors' proposal to Ukraine's government to give up the idea of writing off the debt and repay $8 billion from the reserves of the National Bank, Gontareva said that this was absolutely unacceptable. "It's a completely different story - the debts of the Finance Ministry and the reserves of the independent National Bank," she said.
She added that despite the recent increase, the foreign exchange reserves of the National Bank remain inadequate: in February, they were $5 billion, or less than one month's worth of imports, at the end of May they were $10 billion, and only by the end of the year, according to an IMF program, they are expected to total $18 billion, or three months' worth of imports, which is considered a bare minimum.
Gontareva added that the situation with the reserves needed to cover the short-term foreign debt was even worse. This year, this indicator is expected to increase from 17% to 44%, with the norm being 100%.
According to her, even after the four-year IMF Extended Fund Facility (EFF) program finishes, the projected Ukraine's gross reserves of $38 billion will cover less than six months' worth of imports, and only about 100% of short-term foreign debt.
The NBU governor also said that the situation with the net foreign reserves was even worse, but she did not give any details.