I would like to voice an unpopular thing here: Covid saves the Ukrainian economy.
Recently, the National Bank of Ukraine (NBU) published data on the balance of payments for the last year. In simple terms, the balance shows the sources of inflow and outflow of currency in the country.
This is a very important indicator. Ukraine cannot print dollars or euros. And therefore, if a lot of currency is leaving the country, then this outflow needs to be compensated for by something, foreign currency loans, for example.
And I'll show you, using the example of key items of the balance of payments, why it has saved.
- Current account.
According to the NBU, in 2019, the trade deficit was 12.5 billion. Remittances plus 12.7 billion. Taking into account other items, the account was in the red by 4.1 billion.
In 2020, the trade deficit fell to 1.6 billion. Remittances were at the same level. And now the current account is $ 6.5 billion up.
- The capital account has always been small and can be missed.
- Financial account.
If you have a minus with the current account, then you must cover it with transactions on the financial account. Investments or loans.
In 2019, the minus on the current account was blocked by the inflow of foreign investment in 5.2 billion and portfolio investments (debts) in 5.1 billion.
In 2020, the positive state of the current account eliminated the need to overlap it with financial account transactions. Therefore, there is an outflow of foreign investment. Portfolio (debt) is also outflow. But overall, the balance of payments is positive.
Here is the answer to you why the crisis had practically no effect on the state of the exchange rate and why the IMF's assistance was not critical.
Basically, I want to say that the IMF is an organization that helps countries with balance of payments problems. For this, it was created. And if the problem with the balance of payments is solved, the IMF will not be needed. Covid showed how to solve. By reducing the trade deficit.
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