Ukraine's international reserves declined by 2.9% month-on-month to $20.22bn in February, the National Bank of Ukraine (NBU) reported on March 5.

The reduction in reserves was attributed to debt repayments in the amount of $1.3bn, including $838mn used to service and redeem government bonds and other public debt, $448 to repay on obligations to the International Monetary Fund (IMF).

The outlays were partially compensated by the placement of government domestic loan bonds in foreign currency for $303mn, via interventions in the interbank foreign exchange market: the net purchase amounted to $326.5mn, as well via the revaluation of financial tools into which the reserves were invested: their value last month increased by $56mn in February.

According to the NBU's forecast, the country's international reserves will hover around $21bn in 2019 and 2020.

"External official borrowing and the government’s placement of Eurobonds will make it possible to repay external public debt, the repayments of which will peak in 2019-2020," the NBU's acting governor Kateryna Rozhkova said at a press briefing on January 31. "This will improve the expectations of economic agents and promote macrofinancial stability."

The Ukrainian authorities are going to raise up to $2bn via Eurobond placements in 2019. In 2018, international reserves rose by 10.6% and as of early January amounted to $20.8bn, according to the NBU's preliminary estimate. The increase in international reserves was first of all due to foreign financing and the purchase of an FX surplus by the NBU on the interbank market.

This amount of reserves not only exceeded the latest NBU forecast ($19.2bn, according to the central bank's October 2018 Inflation Report), but also reached a five-year high. The last time the international reserves reached this level was in October 2013.

According to Rozhkova, a key assumption of the macroeconomic forecast is that Ukraine will continue to cooperate with the IMF and enjoy relatively favourable access to the international capital markets.

"At the same time, reasonably high interest rates will contribute to the inflow of debt capital, which, together with continued inflows of foreign direct investment, will finance the current account deficit," she added.