The National Bank of Ukraine (NBU) has downgraded its forecast for growth in international reserves from USD 41 billion to USD 40.5 billion by the end of 2025.
This was announced in a statement by the NBU, Ukrainian News Agency reports.
In 2024, Ukraine received USD 42 billion from international partners in the form of loans and grants.
Thanks to these funds, the government was able to finance a significant budget deficit (about 24% of GDP excluding grants in revenues), and the NBU was able to maintain the stability of the foreign exchange market and increase international reserves to a new historical maximum (USD 43.8 billion at the end of 2024).
It is expected that in 2025, Ukraine will receive USD 38.4 billion in external financing.
Taking into account the government's measures to increase its own revenues and attract funds from the domestic debt market, these funds should be sufficient to fully cover the planned budget deficit for the next year (about 19% of GDP excluding grants in revenues) without resorting to emission sources.
For its part, the NBU will be able to compensate for the structural foreign exchange deficit in the private sector and smooth out excessive exchange rate fluctuations.
This will allow maintaining the stability of the foreign exchange market under a regime of managed exchange rate flexibility, which will be consistent with achieving the 5% inflation target over the policy horizon.
The updated NBU macro forecast foresees a further increase in the discount rate to contain inflation.
The NBU is likely to continue tightening interest rate policy at the upcoming meetings of the Monetary Policy Board if signs of persistent inflationary pressure and the threat of an imbalance in inflation expectations persist.
As Ukrainian News Agency earlier reported, Ukraine's international reserves as of January 1, 2025, according to preliminary data, amounted to USD 43,787.6 million. In December 2024, they increased by 9.7% compared to November due to foreign exchange receipts from international partners, which exceeded the net sale of currency by the National Bank and the country's debt payments in foreign currency.
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