Ukraine should stick to a policy of flexible exchange rate to avoid the repetition of last year's situation when the fixed exchange rate led to a serious crisis in the state of the current account of the balance of payment, according to Anders Aslund, Senior Fellow at Peterson Institute of Economics.
“The present hryvnia exchange rate is close to the balanced one.
However, this exchange rate should be a common exchange rate to prevent
corruption and return confidence,” he told Interfax-Ukraine at the
sixth YES (Yalta European Strategy) summit.
He said that even if Ukraine does not receive a fourth IMF credit
tranche in the scheduled terms, the NBU (the National Bank of Ukraine)
would be able to retain the stability of the exchange rate. He said
that NBU’s present forex reserves of $28 billion are enough for this.
The expert said that the size of reserves is equal to one fourth of GDP
or seven months of imports, while the budget deficit is $5 billion.
“The situation is not bad, but reforms should be done, and it could be done only after election,” he said.
He said that among top-priority problems to be settled is the
necessity to increase prices of gas to the market level to liquidate
the annual $2.5 billion deficit of National JSC Naftogaz Ukrainy.
