Ukraine Gate- Kyiv – May 26, 2022 – Deputy Governor of the National Bank of Ukraine Serhiy Nikolaichuk announced that the level of international reserves in Ukraine amounted to about 27 billion dollars at the beginning of May.
Ukraine spends $2 billion a month for defense needs, vital imports and settlements with payment systems, and about $5 billion has been budgeted since the start of the war from foreign partners.
This system is not viable in the long term, Nikolaichuk said.
The deputy head of the NBU believes that Ukraine needs to restore the normal functioning of the foreign exchange market and return to target inflation and discount rates.
“We will not be able to live all the time only through participation or external grants, we will need to gradually restore the normal functioning of the foreign exchange market, which should be more balanced, and return to inflation targeting and the discount rate as our main tool,” Nikolaichuk said.
He also noted that the Ukrainian economy needs fiscal impetus to prevent a decline in budget revenues in the face of significant military, humanitarian, and social spending.
“Considering that we at the same time decided the feasibility of financing the budget deficit by the National Bank, the NBU bought local government bonds for 100 billion hryvnia, that is, more than $3 billion since the beginning of the war, the current economy will need a financial pulse.
Nikolaichuk said that the large budget deficit is largely due to the decline in budget revenues and the need for huge military, humanitarian and social spending.
As of May 21, 2022, the National Bank has lifted restrictions on the rate at which authorized institutions can sell foreign currency cash to customers, previously, the relevant rate must not deviate from the official by more than 10%.
