Ukraine Markets Daily (December 08, 2017)

Market news

  • Ukraine’s Parliament approves state budget for 2018

Market comment

The UX index increased by 0.3% yesterday while the PFTS index remained unchanged (in UAH terms). The WIG-Ukraine index increased by 0.9%. On the interbank exchange market, the USD/UAH remained unchanged at UAH 27.10 (mid price), according to Thomson Reuters. The official exchange rate reported by the NBU was UAH 27.11.


Ukraine’s Parliament approves state budget for 2018

The draft stated budget for 2018 was adopted by the Verkhovna Rada in the second reading and as a whole. According to the updated draft, budget’s total income and expense for 2018 are expected at the level of UAH 914 bn (approx. USD 34 bn) and UAH 996 bn (approx. USD 37 bn) respectively, resulting in a UAH 82 bn (USD 3 bn) deficit. During the preparation of the draft for the second reading, the government revised the target of expected inflation for 2018 to 9% from 7% and the level of nominal GDP from UAH 3,247 bn (USD 120 bn) to UAH 3,332 bn (USD 123 bn), while the forecast of real GDP growth remained at the previous level of 3.0%.

Our view:

In 2018 the budget deficit is expected not to exceed 2.5% of GDP, compared with the level of 2.7% in 2017. Such reduction of the deficit amount satisfies demands of the International Monetary Fund (IMF) within the USD 17.5 bn Extended Fund Facility (EFF) program and makes possible further cooperation with the financial institution. Meanwhile, the inflation forecast revision was necessary, considering worsening of expectations in the end of October.


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Kind regards

Research Team