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Balance of payment in Q1, 2012 exceeds expectations
7 May 2012
The financial account of Ukraine's balance of payment at the end of the first quarter of 2012 turned to be twice better than it was anticipated, while the current account saw a deficit, but its size was also smaller than it was forecasted and smaller than last year's deficit, he head of the group of advisors to the National Bank of Ukraine (NBU) governor, Valeriy Lytvytsky, has said.

"The general situation presents positive and negative moments, but we have more positive moments," he told Interfax-Ukraine.

The advisor said that the deficit of the balance of trade with goods and services in Q1, 2102 came to $1.7 billion compared to $2.08 billion in Q1, 2011, while as a whole the deficit of the current account fell from $1.34 billion to $1.21 billion and is fully covered by foreign direct investments (FDI).

Lytvytsky pointed out that growth in exports of goods is quicker than growth of imports – 5.2% and 2.5% respectively, while a year ago the pace was opposite: 49.2% and 59.8% respectively.

In March 2012, the deficit of the current account narrowed fourfold compared to February, to $0.31 billion compared to $1.31 billion, including the fall in the deficit of the balance of trade with goods and services from $1.41 billion to $0.66 billion.

"The second important positive moment is the considerable improvement of FDI inflow: from $0.88 billion in January-March 2011 to $1.45 billion in January-March 2012," he added.

Among other positive moments is a fall in outflow of cash currency from $2.36 billion to $2.03 billion and a fall in debts for medium- and long-term loans by $0.55 billion compared to their growth by $0.14 billion in Q1, 2011.

Lytvytsky said that the real sector did not lose access to loans and in January-March 2012 it raised $700 million more than it paid back.

Among negative moments is a fall in exports in March by 2.5%, which was the first decline since 2009, a slow in the pace of net FDI inflow in March, to $0.13 billion from $0.83 billion in February and the absence of inflow of portfolio investments.

"The balance of payment has an upward trend. It resulted in a basis for stability of the exchange rate and led to the expansion of reserves in February by $150 million and by $300 million in March," Lytvytsky said.

He said that the total deficit of the balance of payment of $0.57 billion in Q1, 2012 is a better result than a surplus of $1.11 billion in Q1, 2012, as then the NBU had to buy currency to reserves which affected inflation.

Lytvytsky said that it is important for Ukraine to achieve success at gas talks with Russia, continue a policy of energy saving and increasing energy efficiency, accelerate the economy and look for measures to support exports.

He said that in Q1, 2012 the devaluation of the real effective exchange rate of the hryvnia came to 4.5%, which is the important support to Ukrainian exporters.

Source: Interfax

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