Evaluation of Sufficiency of the International Reserves of Ukraine and Possible Sources for Replenishment
Journal Title: Бізнес Інформ - Year 2015, Vol 7, Issue 0
Abstract
The article is aimed to evaluate the sufficiency level of the international reserves of Ukraine, analyze the main ways of preserving the reserve assets as well as identifying possible sources for replenishment during the crisis period. The authors suggested to differentiate between the concepts of «sufficiency» of international reserves and their «optimality». The article analyzes the main advantages and disadvantages of current approaches to substantiation of sufficiency and optimality of reserve assets. The level of sufficiency of the international reserves of Ukraine has been calculated, using traditional criteria (covering the import, short-term debt, money supply) together with the combined criterion of the IMF. It has been concluded that at the end of the first quarter of 2015 reserve assets were not sufficient for all the considered criteria, aside from the monetary coverage criterion, not so much because of their growth, as because of reduction in the money supply in US-dollar terms owing to the devaluation of hryvnia. To locate possible sources for replenishment of the international reserves, the data of balance-of-payments of Ukraine as well as dynamics of reserve assets of several countries with transition economies in the period of the global crisis have been analyzed. It has been concluded that, at the present moment, the only source of external foreign currency resources is financial assistance, which is provided in terms of the program of cooperation with the IMF. To save the reserves, relationships with the countries-importers of Ukrainian goods need to be expanded as well as swap agreements should be concluded. Among the domestic sources of foreign currency resources, the currency and deposits of the non-bank economy sector can be considered as well, though the use of this resource is complicated by the mistrust in the Government and the banking system, significant devaluation and inflationary risks.
Authors and Affiliations
Mykhaylo Makarenko, Daria Gordieieva
Keywords
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