In October 2024, international reserves of Ukraine decreased by 6%, reaching 36.6 billion dollars. The decrease is due to the currency interventions of the National Bank of Ukraine (NBU) to stabilize the hryvnia exchange rate and significant debt payments that Ukraine made in foreign currency. However, the National Bank of Ukraine remains optimistic and predicts that by the end of the year the reserves may increase to 43.6 billion dollars, thanks to promises of funding from international partners.
Why did the reserves decrease?
A significant decrease in reserves by 6% is explained by several main factors. The NBU carried out currency interventions, selling currency to stabilize the market and curb exchange rate fluctuations. Such policies were necessary to support an economy facing the effects of war and a significant currency shortage. In total, the net sale of currency by the NBU in October amounted to 3.43 billion dollars.
In addition to interventions, large sums were directed to servicing and repaying the external public debt. Among debt payments:
- 710 million dollars. – repayment of foreign currency bonds of the domestic state loan (OVDP);
- 186 million dollars. - payments to the World Bank;
- 21.6 million dollars. – debt repayment to the European Investment Bank (EIB);
- 11.6 million dollars. – payments of debts to the European Union;
- 14.2 million dollars. – payments to other international creditors;
- 87.9 million dollars. - payment of funds to the International Monetary Fund.
Funding and support of international partners
To compensate for costs and maintain reserves, Ukraine continues to receive significant international aid and to place bonds. In October, the government's foreign currency accounts at the NBU received $1.99 billion, which became an important source of reserve support. The key revenues were:
- 1.11 billion dollars. from the International Monetary Fund (IMF);
- 569.1 million dollars. from placement of currency bonds;
- 289.5 million dollars. from the Government of Canada;
- 21.6 million dollars. as a grant from the Government of Serbia.
Forecast of the NBU: optimism despite the reduction of reserves
Despite the decrease in reserves, the NBU assures that the volume of international reserves remains at a level sufficient to maintain the stability of the country's foreign exchange market. According to NBU forecasts, by the end of the year, reserves may increase to $43.6 billion. Such expectations are based on assurances of further financial support from international partners, which will make it possible to compensate for the currency deficit and ensure financial stability.
Challenges and prospects
The decrease in international reserves reflects the difficult economic realities in wartime conditions, when it is necessary to simultaneously maintain the stability of the currency market, fulfill debt obligations, and provide for defense and economic recovery costs. However, strong international support and the NBU's active financial policy give reason to hope for a gradual restoration of reserves and stability of the economy in the long term.
