By the end of 2019, Belarus plans to sign a credit agreement with the China Development Bank to replace the loan it did not receive from Russia, Gazeta.ru reports, citing Belarusian Finance Minister Maksim Yermolovich.
According to the minister, the Chinese bank has only provisionally agreed to give Minsk up to $500 million. The interest rate is still being discussed, and the loan will be denominated in yuans.
“For quite a long time we have been building such relations with the Russian Federation that the payments to Russia are refinanced every year. This year, we did not manage to do so,” said Yermolovich.
He noted that Minsk will pay more than $600 million to Moscow in repayments this year.
Gazeta.ru writes that Belarus’s annual payments to Russia to service debt are close to $1 billion. In the first half of 2019, Minsk owed Moscow in excess of $6.5 billion. As of August 1, Belarus’s total foreign debt was $16.5 billion.
According to Yermolovich, Minsk is turning to different markets in order to settle its debts with Russia. He did not clarify why Russia did not refinance the loan this year.
“If in Russia the situation is such that there is no possibility of partially or fully refinancing our debts… we will look to borrow from some other countries, to help our Russian colleagues,” the minister said.
Experts questioned by Gazeta.ru said that China’s interest in lending to Belarus could be explained by its “growing commercial appetites”. According to Vita Spivak, director of the Expert RA rating agency, lending is a traditional way for China to spread its influence.
Spivak points out that, when lending to Belarus, Moscow was able to set certain geopolitical conditions for Minsk, and China has requested concessions for its companies on the Belarusian market.
The expert believes that the Russian government will not be pleased by Minsk’s agreement with Beijing. Russia is already competing not only with Belarus but with other CIS countries for Chinese investments.