Things for Ukraine are going from bad to worse.
Following the revelation that Ukraine's sovereign gold has mysteriously been Corzined [9], following a stunning admission by central bank governor Valeriya Gontareva on primetime TV that "in the vaults of the central bank there is almost no gold left. There is a small amount of gold bullion left, but it's just 1% of reserves" which however left many questions unanswered and which led to prompt legal action against the central bank governor who is being charged with criminal abuse of power and [10]misuse of office under Article 364 of the Criminal Code of Ukraine, one would think that at least Ukraine's dollar reserves would have increased by a modestly proportional, if not market equivalent, amount.
Alas that is not the case.
As the central bank reported overnight, the country's foreign-currency (and gold reserves) dropped by over 21% in one month, to under $10 billion in November for the first time in nearly a decade due to large payments for debt and gas, from $12.6 billion to $9.966 billion.
The reason for the drop per the CB [11]:
- A reduction of $1.45 billion due to the need to remit a portion of funds that Naftogaz of Ukraine has set aside in a restricted account with the National Bank of Ukraine in order to settle gas bills and arrears with Gazprom OJSC for natural gas imported in November-December 2013 (it remains to be seen if Gazprom confirm receipt or if the funds were merely wired... somewhere).
- A reduction of $897 million due to repayment and service Ukraine's foreign currency debt obligations, including the installment due to the IMF.
- Lastly, a reduction of $573 million as a resyult of intervention in the foreign exchange market.
As the WSJ comments [12], the bank’s announcement makes clear that the country is running out of the cash it needs to prop up the currency and pay back its debts, suggesting it needs more assistance from the West to avoid a default.
Ukraine’s coffers have emptied this year as its economy has shrunk and its national currency, the hryvnia, has lost around half its value against the U.S. dollar.
Ukrainian officials and analysts say Ukraine urgently needs a boost to its $17-billion lending program from the International Monetary Fund to prop up its finances. That comes amid a fresh push to stop the armed conflict with Russia-backed rebels after previous efforts have floundered.
And yet, as a result of recently souring relations between Ukraine and Europe, notably Germany, it is becoming increasingly unlikely that Europe which has major economic problems of its own, will be supporting the country which as we saw earlier this week, is well on its way to becoming the latest (vassal) state of the US, now that a US Citizen, Natalie Jaresko, has been appointed the country's Finance Minister (which as we reported yesterday [13] led to fights in the Ukraine parliament as the locals finally realize they got the short end of the stick in their negotiations with the US). Meaning it would be up to the US to continue providing the funding to keep the Ukraine US-puppet government going, in exchange for which the only quid-pro-quo remains a western backed army preventing aRussian onslaught in the Ukraine and, of course, providing Joe Biden's son with a director seat on one of the biggest local energy companies. Surely, for national security reasons.
Meanwhile, as the civil war ravaged nation is about to enter the depths of winter, with its reserves evaporating at a torrid pace the next thing Ukraine's tortured population has to look forward to is hyperinflation as its currency begins losing even more of what little value it has left: first slowly, and then all of a sudden.
Now if only Ukraine had some gold left to sell when the rainy days hit...
