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30 September, 2013 17:27   ▪  

Ex-Finance Minister Viktor Pynzenyk: The government has spent USD 16bn to support stable hryvnia exchange rate over the past two years

Since mid-2011, Ukraine has spent USD 16bn of its international reserves to keep hryvnia exchange rate unchanged. Ex-Finance Minister and current MP Viktor Pynzenyk said this in his interview for Inter TV channel, Ukrayinska Pravda, an online publication, reports

“Ukraine has fallen hostage to a situation where it can only support current hryvnia exchange rate with new loans,” he claimed.

“What is happening today is nothing extraordinary. My point is that “the bad things” have been happening for four years already. Adequate professional measures are needed to deal with them. Not things like tax on foreign currency transactions or tax on exports. The professional solution should be as follows: hryvnia exchange rate should respond to the situation, it can’t stay fixed,” Pynzenyk said.

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“This is absurd. They’ve been keeping hryvnia at 7.99 per USD dollar for four years now. There is nothing heroic about this. In mid-2011, Ukraine’s international reserves were USD 38.4bn. Now, it’s USD 22bn. Where have 16bn gone? To keep the exchange rate unchanged. The rgovernment spent USD 3bn on this since the beginning of this year alone. Ukraine cannot afford to do this, it can’t spend its reserves, especially now that they are very low compared to its short-term debts,” ex-minister noted. 

“It is obvious that the later the government lets hryvnia float, the more risks and serious problems they will face…. Hryvnia should react to the market situation” he explained.

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In the early 2013, the National Bank’s (NBU) international reserves dropped 11.8% or USD 2.894bn from USD 24.546bn to USD 21.651bn. In June, July and August, Ukraine’s international reserves shrank by USD 1.4bn, USD 525.8mn and USD 1.068bn respectively.

Over 2012, international reserves lost 22.8% or USD 7.248bn.

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