3 Apr 2023 20:17

Ukraine balance of payments deficit decreases around 50% to $722 mln in Feb

MOSCOW. April 3 (Interfax) - The deficit of the consolidated balance of payments of Ukraine in February totaled $722 million after a surplus of $1.208 billion in January, but this deficit is 52.4% less than in February 2022, when it was $1.52 billion, Ukrainian media reported, citing the National Bank of Ukraine (NBU).

According to the NBU, the deterioration in February compared to January is associated with a net outflow from the financial account of $532 million, which was due to an outflow from private sector operations, while in January of this year a net inflow of $2.011 billion was recorded, and in February last year, $1.565 billion.

The current account deficit of the balance of payments in February 2023 totaled $216 million against a deficit of $815 million in January 2023 and a surplus of $4 million in February last year.

"A significant expansion of the negative balance of trade in goods and services compared to February 2022, including due to the significant expenses of Ukrainian citizens abroad, was largely offset by an increase in secondary income (thanks to receiving a grant from international partners) and a reduction in payments for investment income," the NBU notes.

For two months of 2023, the current account deficit totaled $1 billion against a surplus of $0.6 billion in January-February 2022. Excluding reinvested earnings and grants from international partners, the shortfall was $3.2 billion.

According to the National Bank, the export of goods from Ukraine in February decreased 35.9% compared to the same month of the previous year (in January - by 46.8%), to $ 3.1 billion, while imports decreased 14.5% (in January - by 12.9%), to $5.1 billion.

In February 2023, in nominal terms, exports to Asian countries decreased the most - by $750 million, and their share in the export of goods decreased from 33.4% in February 2022 to 28.3%. Exports to African countries also significantly decreased (by $522 million), and their share fell from 12.4% to 2.7%. In CIS countries, imports decreased $275 million, and share - from 8.4% to 4.3%. Exports to the EU decreased $98 million (by 5%), while its share in the export of goods increased from 40% to 59.3%.

Imports in February in nominal terms decreased the most from the CIS - by $1.1 billion, and its share fell from 20.7% in February 2022 to 1.8%. Imports from the Americas also decreased - by $121 million (by 27.6%), and its share decreased from 7.4% to 6.2%. At the same time, imports from EU countries increased (by $284 million, or 13.2%, its share increased from 36.1% to 47.8%) and Asia (by $40 million, or 2.7%, share increasing from 25.1% to 30.1%).

The trade deficit in in services totaled $1.2 billion against a $169 million surplus in February 2022: exports of services decreased 24.8%, while imports of services grew 1.6 times due to the expenses of refugees and short-term migrants who went abroad (growth 2.5 times, up to $2 billion). At the same time, imports of all other services decreased 35.6%.

The volume of private remittances decreased 16.6% to $978 million. Wages that Ukrainians receive from abroad decreased 21.1%, and other private transfers received through official channels decreased 36%. In general, $475 million was sent through official channels, which is 29.6% less than in February last year, and $503 million through informal channels (1.2% less).

Net borrowing from the outside world (total balance of the current account and capital transactions account) totaled $190 million (in February 2022, there was $45 million net lending). In all, in January-February 2023, net borrowing from the outside world totaled $993 million, while for the corresponding period last year - net lending was $651 million.

According to the NBU, in February a net outflow of $532 million was recorded on the financial account (in February last year - a net inflow of $1.6 billion), but for two months a net inflow of $1.5 billion remains against a net outflow of $3.9 billion for the same period last year.

Net inflow from public sector operations in February was $343 million, compared to $478 million of net outflow a year earlier, driven by a net inflow of $511 million on loans from international partners. At the same time, net payments on government bonds to non-residents totaled $158 million.

The National Bank estimated the net inflow of foreign direct investment in February at $201 million (in February 2022 - a net outflow of $719 million), including: reinvestment of banking sector income - $77 million; net equity inflow (excluding reinvestment of earnings) - $126 million.

For two months of 2023, net inflow of foreign direct investment is estimated at $384 million (including reinvestment of banking sector income - $189 million) compared to a net outflow of $553 million for the same two months of last year.

The National Bank reports that as of March 1, 2023, the volume of Ukraine's international reserves totaled $28.9 billion, which provides financing for future imports for 3.7 months.