In January-September 2017 the negative balance of current account increased to $3 billion.
The formation of significant amounts of liquidity in the banking system and government accounts can potentially threaten the stability of the national currency.
About it reports a press-service of the National Bank of Ukraine (NBU).
The NBU Council noted the lack of use by the Board of the NBU monetary instruments to achieve the inflation target.
The NBU said about the need for greater coordination between monetary and fiscal policy to prevent a sharp increase in inflation risks.
In addition, the regulator added that the banking system liquidity continues to be at historically high levels. The banks invest in certificates of Deposit National Bank and state securities. The total volume of government bonds outstanding is close to the size of the Deposit portfolio of the banks.
It is noted that the Cabinet has accumulated historically the highest balances on the Treasury account in the National Bank. In addition, continue to be available on the Bank deposits the funds of local budgets.
“This level of liquidity indicated the formation of the “monetary overhang”, which is concentrated in the banking system and the public sector. Given the current state of the monetary market, the expenditures of the government within a short period of time, as it traditionally happened at the end of the year, may have more significant risks to the stability of the monetary unit of Ukraine than in previous years”, – stated in the message.
The NBU Council also reported that in January-September 2017 the negative balance of current account increased to $3 billion (from $2.7 billion in the corresponding period last year) the Reason for this growth called large-scale procurement of energy and agricultural machinery.
At the same time, balances of loans to the corporate sector, in January-September decreased by more than 25 billion UAH. The increase in balances on loans to households in domestic currency in this period reached almost 20% mainly due to the revival of consumer lending.
“The continuing trend to growth of volumes of consumer crediting can cause a further increase in the current account deficit of the balance of payments and, accordingly, the outflow of foreign currency from the country. This, in turn, may create risks to the stability of the monetary unit of Ukraine and offset the impact of the actions of the National Bank aimed at ensuring price stability in the state”, – is told in the message.
The NBU also believe that such tendencies on the monetary market and the economy indicated the formation of the risk of accumulation of economic imbalances which were inherent in the domestic economy in previous years and whose implementation has repeatedly led to crisis.
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