The Belarusian government is asking Russia for a loan of $1 billion in order to repay its foreign debt obligations. As reported by TASS, this was announced on Wednesday by Belarusian First Deputy Prime Minister Vasily Matyushevsky.
Matyushevsky says that in 2019, Minsk will have to pay foreign creditors $3.7 billion, despite the fact that at the end of last year, the country’s central bank had only $8 billion in reserves.
The Belarusian government intends to refinance half of this debt, and to repay the other half with the help of Russian money, the diplomat explained, noting that “issues” are currently being discussed.
“We are not dramatizing, but there are issues, and we are responding to them,” he said. “Our strategy is not to increase our debt obligations”.
The drafting of the documents required for new inflows into Belarus has begun, the press service of the Russian Finance Ministry reported last week, emphasizing that, in addition to an intergovernmental loan, there will also be new tranches through the Eurasian Fund for Stabilization and Development (EFSD).
Last year Belarus received $200 million from the EFSD, an institution with $8 billion in capital, 90% of which is Russian money. A further $400 million is planned for this year, after which the total loan amount will grow to $2 billion.
In addition to the Russian money, Belarus is counting on investors from China, Matyushevsky explained.
A placement of $500 billion in bonds on the Chinese market has been planned for the end of the year. In July, representatives of the China Chengxin International rating agency visited Minsk in order to assess the state of the economy and state finances for the purpose of issuing Belarus a sovereign credit rating.
Belarus has a chronic payment balance deficit: the inflow of foreign currency does not meet all the economy’s requirements, experts from the Higher School of Economics (HSE) point out. The International Monetary Fund is also prepared to assist Alexander Lukashenko, but its terms are significantly stricter: he is required to reduce the government sector’s share, and drop the prices on communal services.
In the meantime, Minsk prefers to do the exact opposite: $12.5 billion has been used to support government companies in the last 6 years, according to HSE estimates.
These loans are not returned: in October last year, Lukashenko postponed the repayment of Gomselmash’s $426 loan by another 10 years. During this time, the concern is supposed to develop a “super combine harvester”.