News
05.05.2014
IMF expects gradual weakening of hryvnia by year end - Naiman
The IMF experts expect a slow weakening of the hryvnia to 12.8 UAH/USD by the year end. Eric Naiman writes about this on his blog, referring to the Memorandum on cooperation between Ukraine and the IMF.
“Looking at calculation of Ukraine's GDP in the hryvnia and dollars, made by the IMF experts, they expect slow hryvnia weakening toward 12.8 UAH/USD. However, if proceed from the estimates of currency reserves growth rates and the hryvnia monetary base, a target rate for 2019 is rather 18 UAH/USD, and at the end of 2016 - 15 UAH/USD,” the expert says.
At the same time, the IMF Memorandum, Naiman writes, says that the fundamentally based hryvnia rate is at the level of 10.5 UAH/USD.
“However, one could hardly look so far into the future. For instance, as regards an inflow of direct foreign investments. The IMF in its model is not planning any substantial inflow of direct foreign investments. And the main source of filling the NBU reserves is money from the Fund and other official organizations (World Bank, EU, EBRD and others),” the economist notes.
To remind, according to macroeconomic calculations of the IMF, nominal GDP will be UAH 1.506 trillion (by Cabinet's estimates of March 25 - UAH 1.574 trillion). In dollars, the GDP estimate is USD 142 billion, proceeding from the average annual rate of 10.6 UAH/USD. At the same time, real GDP of Ukraine will reduce by 5% (according to the Cabinet - by 3%), inflation at the end of the year will jump to 16.2%, but then it will slow down.
The monetary base is expected to grow by 21.5%; money supply - by 11.8%; the balance of payments deficit will reduce to 4.4% of GDP (9.2% last year).
At the same time, the currency reserves will increase by the end of 2014 to USD 19.2 billion (USD 15.086 billion as of the beginning of April).
As reported by Ukrinform, the IMF has approved a stand-by credit for Ukraine at USD 17.1 billion on April 30.
According to the Finance Minister of Ukraine, the first tranche of the IMF to the amount of about USD 3 billion is expected on May 5-8, 2014.
