Ukraine's government is forecasting a hryvnia currency rate of 21 to the dollar this year in a revised budget drawn up to satisfy its international creditors, Ukrainian Prime Minister Arseny Yatseniuk said on Saturday. That is significantly stronger than the current exchange rate of around 25.9 to the dollar.
A year of political upheaval and bitter conflict with pro-Russian separatists led to the hryvnia halving in value in 2014. So far this year it has weakened by a further 30 percent or so. "The macroeconomic parameters have changed due to the continuation of Russian aggression; the currency rate as much as inflation," Yatseniuk said in a government meeting.
"We don't receive forecasts from the central bank, but as agreed with our international creditors at this stage we see the average annual (hryvnia) rate at 21," Yatseniuk said. He did not elaborate on the reasons for the predicted strengthening in the hryvnia rate.
He also said inflation, which hit 24.9 percent in 2014, the highest level in 14 years, would come to 26 percent this year. Under the terms of a new $17.5 billion bailout programme from the International Monetary Fund, the government must present a revised budget to parliament based on the amended estimates.
Yatseniuk said the proposed budget amendments would be submitted to parliament on Monday and expressed the hope that they would be approved no later than February 25. Ukraine can only receive the next tranche of IMF cash once the new budget has been approved. The IMF programme is part of a new $40 billion four-year funding package for Ukraine, whose foreign currency reserves stood at just $6.4 billion on February 1, having plummeted 63 percent in 2014.
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