Shmyhal discusses future of hryvnia and Ukraine's financial outlook
Ukrainian authorities have no plans to issue additional hryvnia this year or next, Prime Minister Denys Shmyhal said, urging against viewing this as a crisis. He noted that moderate, controlled emission during wartime is permitted by the IMF, but emphasized that Ukraine will not use this tool and advised against succumbing to panic or manipulation.
Prime Minister Denys Shmyhal praised Ukraine's financial and macro-financial policy as “very balanced,” noting that raising taxes is crucial to financing the Ukrainian military. He stressed that the responsibility to fund the military lies with Ukraine and not external partners.
Previously, on July 17, 2024, the National Bank of Ukraine (NBU) reduced the hryvnia's official exchange rate to a historic low of UAH 41.4627/$1, continuing a trend of depreciation that began in early July. Since the start of 2024, the hryvnia has fallen 9.1% against the dollar. The NBU attributed the decline to increased government spending and currency restriction easing.
The Center for Economic Strategy (CES) forecasts the hryvnia will end the year at around UAH 42/$1, a revision from the previous estimate of UAH 40.5/$1, aligning closely with the state budget projection of UAH 42.1/$1. The forecast for the annual average rate was also adjusted to UAH 40.1/$1 from UAH 38.7/$1.
Annual inflation rose to 4.8% in June from 3.3% in May. In January, the NBU improved its 2024 inflation forecast from 9.5% to 8.6%, with expectations of a rise to 8.8% by the third quarter. Consumer price growth slowed to 0.4% in January from 0.7% in December.
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