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Ukraine has sufficient forex reserves to meet external liabilities

December 10, 2013, 15:09 UTC+3 KIEV
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KIEV, December 10. /ITAR-TASS/. Ukraine has sufficient foreign exchange reserves to meet its external obligations, the head of the National Bank governor’s group of advisors, Valery Litvitsky, told Ukraine’s First National TV channel on Tuesday.

“This year the central bank’s foreign exchange reserves were formed through loaned funds to a lesser degree than it had been in the previous years. We have significantly more than $18 billion in reserves. This is enough to fulfill our obligations in the near future,” Litvitsky said, adding that in 2013 Ukraine “had already fulfilled its foreign exchange liabilities.” “Therefore you should not listen to those who say that $18.8 billion reserves are a critical limit,” he said.

Earlier Ukraine’s gold and foreign exchange reserves reached $32 billion, but almost half of them were formed through loans. “Now we are forming net reserves without foreign loans,” Litvitsky said.

“The current economic and political situation in the country will not affect the hryvnia exchange rate,” Litvitsky said. “The National Bank of Ukraine plans to further pursue its policy of controlled floating rates. I assess those responses that we are giving now as absolutely adequate and sufficient.”

The National Bank’s gold and foreign exchange reserves reduced by 8.93 percent in November and reached $18.791 billion as of December 1. As of November 1 the National Bank’s reserves totaled $20.632 billion and as of October 1 — $21.639 billion.

Some experts forecast that Ukraine may face a default if its gold and foreign exchange reserves remain lower than $20 billion. Over the past eighteen months Ukraine lost almost $9 billion of gold and foreign exchange reserves. If they reduce at the same pace, they will reach $15-18 billion in December.

The president of the Ukrainian Analytical Centre, Alexander Okhrimenko, said the reduction of gold and foreign exchange reserves would not bring any risks for the economy and stability of the exchange rate, as this volume (of $18.791 billion) makes it possible to finance the critical imports and maintain balance on the currency market.

“In any case, the current size of gold and foreign exchange reserves is not critical and allows to meet demands for critical imports,” Okhrimenko said. “This is quite enough to manage the situation on Ukraine’s foreign exchange market.”

The National Bank of Ukraine keeps the situation on the foreign exchange market under control, he said.

At the same time Okhrimenko forecast gradual restoration of the National Bank’s gold and foreign exchange reserves thanks to normalization of trade relations with Russia and agreements on investments and debt financing reached with China and the European Union.

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