Ukraine’s International Reserves Rose to Almost USD 31 Billion in 2021

Ukraine had USD 30,940.9 million in international reserves as of 1 January 2022, preliminary data show. Over the course of 2021, international reserves increased by USD 1.8 billion or 6%. Ukraine boosted its international reserves through external financing and the NBU’s purchases of foreign currency in the FX market.

Specifically, Ukraine in August 2021 received SDR 1,928.2 million as part of an IMF allocation, and in November, the second tranche – of SDR 500 million – under the Stand-By Arrangement with the IMF. Official funding from related sources also came in during the year, including some EUR 600 million from the European Commission. In total, the government raised USD 11.2 billion from foreign and domestic sources in 2021. This was almost sufficient to finance the servicing and repayment of FX-denominated public debt (USD 11.5 billion).

During most of the year, FX supply in the market surpassed FX demand, primarily due to favorable global conditions for major Ukrainian exports. The NBU, guided by its Foreign Exchange Intervention Strategy, purchased the excess foreign currency to replenish international reserves. These interventions did not counteract the market trend. The NBU ended the year as a net purchaser of more than USD 2.4 billion.

In December 2021, Ukraine’s international reserves increased by USD 342.5 million or 1.1%. This growth was primarily driven by FX inflows to the government.

 Overall, the dynamics of international reserves in December were shaped by the following:

1. First, transactions related to public debt management.

The government received USD 1,365.6 million in FX inflows. That includes USD 858.3 million from the issue of domestic government debt securities, and USD 105 million from the World Bank. A total of USD 847.7 million went to service and repay FX public debt, of which USD 588.2 million was allocated for the servicing and repayment of domestic government debt securities.

 2. Second, the NBU’s FX interbank transactions.

To smooth out excessive exchange rate fluctuations, the regulator bought USD 84 million and sold USD 236.5 million last month. The central bank thus generated USD 152.5 million in net FX sales in the interbank FX market in December.

 3. Third, revaluation of financial instruments. These instruments declined in value by USD 22.9 million last month.

International reserves are now covering 4.1 months of future imports, which is sufficient for Ukraine to meet its commitments and for the government and the NBU to make their current transactions.

Data on international reserves and FX liquidity are compiled and published on a monthly basis:

a) for preliminary data, no later than on the seventh day after the reporting month ends

b) for revised data, no later than on the 30th day after the reporting month ends.