National Bank of Ukraine lowers 2024-2025 int'l reserves forecast

MOSCOW. Jan 25 (Interfax) - The National Bank of Ukraine is now forecasting the country's international reserves will be $40.4 billion at end-2024 and $42.1 billion at end-2025, Ukrainian media reported, quoting an NBU press release on Thursday.

The NBU previously forecast reserves would be $44.7 billion at end-2024 and $45 billion at end-2025.

"Thanks to external support and the NBU's consistent policy, Ukraine's international reserves increased by 42% in 2023 to $40.5 billion. International aid will continue to be the main source of capital inflows into the country," the NBU said.

It said that despite delays in international aid disbursement at the beginning of the year, its regularity is anticipated to resume in the coming months. Under the baseline scenario of the NBU's forecast, Ukraine is expected to receive about $37 billion in foreign loans and grants in 2024.

"As security risks expectedly decline in the coming years, Ukraine will restore its ability to independently finance its own needs, and so the volume of official financing will taper off (to about $25 billion in 2025 and $12 billion in 2026)" the NBU forecasts.

It estimates this aid will be enough to maintain a sufficient level of international reserves. Their volume will be in the $37 billion-$42 billion range during 2024-2026, ensuring exchange rate sustainability.

The NBU also worsened its current account deficit forecast substantially, to $16.9 billion from a previous $11 billion in 2024 and to $19 billion from $17.6 billion in 2025. A deficit of $23.8 billion is expected in 2026 with the reserves falling to $36.9 billion.