Bloomberg News

Ukraine’s Current-Account Gap Widens to 5.5% on Energy Costs

February 01, 2012

(Updates with comment from economist in fourth paragraph.)

Feb. 1 (Bloomberg) -- Ukraine’s current-account deficit widened to 5.5 percent of economic output last year from 2.2 percent in 2010 as the cost of energy imports jumped.

The gap was $9.3 billion, the highest level since 2008 and more than three times the previous year’s $3 billion, the bank said today from the capital, Kiev. Preparations to host the Euro-2012 soccer championship, imports of equipment and weaker demand for Ukraine’s exports in the second half also contributed, according to a statement on its website.

Ukraine’s reserves dropped to $31.794 billion at end-2011, their lowest level since July 2010, as the central bank sold foreign currencies to support the hryvnia. The former Soviet state’s currency fell 0.63 percent against the dollar last year.

“The country had to rely on external borrowing to cover the current-account deficit,” Iryna Piontkivska, an economist at Troika Dialog in Kiev, said by phone. “Unfavorable debt market conditions amid relatively high external-debt refinancing needs and a growing current-account gap give rise to depreciation concerns.”

The shortfall rose to $4 billion in the fourth quarter, compared with $2.5 billion in the previous three months, the bank said. It shrank to $1.2 billion in December from $1.5 billion a month earlier.

The hryvnia was 0.1 percent lower at 8.03859 per dollar as of 16:02 p.m. in Kiev.

--Editors: Andrew Langley, Paul Abelsky

To contact the reporter on this story: Daryna Krasnolutska in Kiev at dkrasnolutsk@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net;


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