State payments continue according to the plan

External state debt of Belarus has fallen by almost $200m
By Yuri Chernyakevich

Belarus always pays its debts on time, repaying its loans from foreign financial organisations. As of 1st February 2014, the external state debt of Belarus stood at $12.2bn — with almost $200m repaid since January to the International Monetary Fund and to Chinese banks.

Last year, according to the Ministry of Finance, Belarus directed almost $2bn for the repayment of external state debt. However, this year, more is required: about $2.5bn. In addition, interest payments of $800m are necessary on loans from the IMF and the IBRD, the Russian Federation, from the EurAsEC Anti-Crisis Fund, and from banks in Germany, the USA, China and Venezuela. Total repayment expenses thus exceed $3bn.

According to the Government, the country should fulfil all its obligations to international credit organisations without delay. The Deputy Economy Minister, Alexander Yaroshenko, announced recently that, in order to repay its debts, Belarus intends to refinance some of its debt portfolio and to place state bonds on international capital markets. Privatisation of state owned properties should also raise about $2bn.

Experts don’t doubt that Belarus is capable of servicing its state debt. Business Forecast analyst Alexander Mukha notes that, despite peak payments in 2014, state finances should remain stable. He explains, “Firstly, our country’s refinancing of external debts to Russian and Chinese banks is within reasonable terms. Secondly, this year, Belarus is to receive state credit from the Russian Federation’s government, as well as the last tranche from the EurAsEC Fund — of $440m.” He adds that earnings from the placing of sovereign Eurobonds could be used to service Belarus’ external liabilities. “Belarus’ third release of Eurobonds may take place in mid-2014 — worth nearly $800m. In addition, the Ministry of Finance is likely to place more state currency bonds (worth $700m) on the home market — available to legal entities and individuals. Payments on external state debt should be carried out on schedule and without any problems for the national budget.”

Mikhail Kovalev, the Dean of the Economics Faculty at the Belarusian State University, agrees, believing that all payments on external state debt will be made on time. He asserts, “Belarus’ position is far from critical — as state debt remains low. The ratio of external public debt to GDP in 2013 fell from 18.9 percent to 17.4 percent: one of the lowest in the European region, showing that Belarus can fulfil its obligations to external creditors in full.”
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