Restricting exports will reduce food inflation in Ukraine for some time, but will exacerbate pressure on the exchange rate, the regulator believes.
The risk of stopping or complicating the work of the grain corridor has increased significantly. Additionally, problems may arise with the extension of restrictions on the import of Ukrainian food by some European countries. This was stated in the inflation report of the National Bank of Ukraine for April, published the previous day.
It is indicated that such a scenario would worsen the prospects for agricultural exports and reduce foreign exchange earnings:
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$270 million per month if the ban on food exports to neighboring countries is extended;
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by $290 million per month – in case of failure to restore the work of the grain corridor;
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of $800 million per month – including the combined effect of these two restrictions, taking into account a partial reorientation to alternative supply routes.
According to the NBU, export restrictions will temporarily reduce food inflation in Ukraine by increasing supply to the domestic market.
“But this will complicate the activities of farmers and may force them to slow down crops, which will negatively affect economic activity in the future and exacerbate pressure on the exchange rate,” the regulator said.
Earlier, Turkey announced the danger for the grain agreement. In Russia, the list of requirements for extending the grain agreement is extensive, starting with the reconnection of Rosselkhozbank to the SWIFT system.
As you know, in March, Ukraine announced the extension of the grain initiative for 120 days, and Russia for 60. According to Moscow, the terms of the agreement will expire on May 18.
Source: korrespondent
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