Ukraine printing money to cover deficit

The central bank purchased the local-currency equivalent of over $800 million worth of local bonds in just the past week

The National Bank of Ukraine (NBU) “printed” another 30 billion hryvnia ($814 million) during the past week, Ukrainian parliament MP Yaroslav Zheleznyak said on Wednesday, referring to the central bank’s purchase of local bonds.

“Over the past week (August 16-23), the NBU printed another 30 billion hryvnia. The total amount of NBU financing through budget printing reached 285 billion hryvnias ($7.7 billion),” Zheleznyak wrote on his Telegram channel.

The Ukrainian authorities had previously revealed that the budget deficit is currently about $5-7 billion a month. Since tax revenues and customs payments are unable to help cover this gap, the NBU is having to resort to ‘printing’ money by purchasing government bonds to cover budget expenditures. Central bank financing of a deficit can increase inflation risks.

According to Zheleznyak, the sale of domestic government bonds has been bringing “very little” to the budget.

READ MORE: ‘Ukraine is bankrupt’ – Moscow

Also, of the “promised” $5 billion of foreign aid for August, Ukraine has received only $1.4 billion so far, including $350 million from Canada for the purchase of gas.

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