NBU report: external loans and remittances from workers exceed the volume of foreign investment
The net influx of foreign direct investment into Ukraine in 2017 amounted to $2,3 billion, a PolitNavigator correspondent reports.
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The press service of the National Bank of Ukraine reported this on Wednesday, January 31.
As the regulator noted, the completion of most bank recapitalization programs led to a reduction in the volume of banks’ operations to convert debt into authorized capital to $0,6 billion at the end of 2017, compared to $2,1 billion in 2016. Excluding such transactions, net foreign direct investment receipts over the past year rose 26% to $1,8 billion.
Also in 2017, the growth of remittances continued against the backdrop of increased migration processes and strengthening of the currencies of Eastern European countries. The increase in the provision of IT services led to an increase in transfers from the United States. The growth in remittances was offset by larger dividend payments than in 2016. These payments, in turn, increased due to the permission to repatriate dividends accrued for 2016.
Net capital inflows in the financial account increased to $6,4 billion (compared to $4,7 billion in 2016). In addition, the successful completion of the third revision of the EFF program with the IMF allowed the government to receive another tranche of a macro-financial assistance loan from the EU in the amount of $0,3 billion.
Also in September 2017, Ukraine, after a four-year break, returned to the external borrowing markets - net borrowings on sovereign Eurobonds amounted to $1,3 billion. And the acquisition by banks of government bonds denominated in foreign currency led to a reduction in the assets of the banking system by $0,6 billion. The decline in cash outside banks remained an important source of financial account revenue in 2017. However, its impact decreased significantly compared to the previous year - the reduction amounted to $1,7 billion.
Thus, thanks to the surplus in the consolidated balance of payments and the receipt of the next tranche from the IMF in April, international reserves increased by 21% to $18,8 billion, which provides 3,6 months of imports as of the end of 2017.
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