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Nation    

NBU to curtail Treasury bill purchases
Journal Staff Report

KIEV, July 9 – The National Bank of Ukraine said Thursday it will probably stop automatically buying Treasury bills from the government, casting doubts on Prime Minister Yulia Tymoshenko’s plans to boost the capital of Naftogaz Ukrayiny.

The government seeks to sell 18.6 billion hryvnias in Treasury bills to raise cash for boosting to 24.2 billion hryvnias the capital of Naftogaz, as the company has been struggling with natural gas payments.

But Valeriy Lytvytskiy, the chief analyst at the NBU, said the government should try to sell the bills to commercial banks as the NBU has already printed too much money this year.

“The money printing program of the central bank has been very intensive this year, and the year is not over yet,” Lytvytskiy told Interfax-Ukraine. “That’s why we’ll be very cautious and will be taking into account price, debt and exchange rate security of the country.”

The NBU’s refusal to automatically buy the Treasury bills suggests that the government may face serious problems with raising the cash, a key to successful increase of the Naftogaz capital.

Tymoshenko planned to use the capital hike to help Naftogaz pay its natural gas debts and to be able to buy 19.5 billion cubic meters of natural gas within the next three months to ensure steady supply in the winter.

Lytvytskiy said the government may try to sell the Treasury bills to commercial banks or other private entities, and said the entities had “great sums of money” on the market.

“There is liquidity on the primary securities market,” Lytvytskiy said. “We wish [the government] success in placing the Treasury bills on the primary market.”

The plans to boost the capital of Naftogaz will most likely increase budget deficit this year and that may cause objections from the International Monetary Fund. The government hopes to win at least $7 billion in IMF lending through the end of the year.

The government approved resolution on Wednesday calling for the issue of additional Treasury bills to hike Naftogaz capital. The move was controversial as bills affecting the 2009 budget deficit that must be approved by Parliament.

Parliament was in a deadlock for the past week due to the protests from the opposition Regions Party.

President Viktor Yushchenko has the power to suspend any government resolution, but he has not yet announced his intentions concerning the Naftogaz capital hike. He earlier criticized the plans.

Tymoshenko resorted to Treasury bill issue after failing to secure lending from the European Union and Russia. He government is still in talks over $4 billion in lending that would go to pay for massive natural gas imports.

Yushchenko earlier accused Tymoshenko of running risky and controversial policy in respect to Naftogaz by refusing to hike domestic gas prices to levels of prices of gas imports.

Naftogaz will face 27.3 billion hryvnias in losses this year because Naftogaz has been buying gas from Gazprom at market value and then re-selling it to domestic consumers at 80% discount, a major financial burden for the company, according to Yushchenko.

Tymoshenko refused hiking domestic gas prices because she had “promised” voters not to increase the prices this year ahead of the next presidential election in January 2010. (tl/ez)




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  28.03.2024 prev
USD 39.23 39.14
RUR 0.425 0.422
EUR 42.44 42.44

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  27.03.2024 prev
PFTS 507.0 507.0
source: PFTS

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