Belarus Seeks Money to Serve Its Mounting External Debt
Today a Belarusian delegation which included the Minister of Finance of Belarus Andrey Kharkavets and the Minister of Economy Mikalai Snapkou arrives for a three-day visit to Singapore and Hong Kong. They plan to arrange a road show to market the new Eurobonds issue of Belarus. They need to issue more bonds to service the growing national debt.
In 2013-2014 the amounts that Belarus will have to serve its external debt is likely to increase significantly. The country has borrowed this primarily to support of foreign balance figures. Now it steady keeps monthly deficit after the scandal with Russia on the solvents import. The need to repay the mounting external government debt puts the authorities in a rather difficult situation.
The resources required for payment of the external debt in 2013 are twice as much as it was last year and amounts to $3 billion. It seems that the Ministry of Finance wants to deal with primarily with current payments and delay the final resolution of the problem.
Source: Belapan
Who Belarus Owes To and For What
The creditor countries to whom Belarus will have to pay about $814 mln are the United States, Germany, Russia, China and Venezuela.
The bulk of these liabilities comes from the Russian loan received for construction of atomic power station. A German loan has helped the Belarusian State University to build the facilities of the faculty of foreign relations. Debts to the Chinese enabled different state ministries to implement a couple of investment projects. In its turn a loan from the USA has been spend for the purchase of cereals and grain. And finally the main reason why Belarus has applied for the financial help to Venezuela was the need to improve the foreign balance figures.
However, the bulk of external payments falls on covering loans received from international financial agencies: International Bank for Reconstruction and Development and International Monetary Fund – about $1,9 bln. The IBRD’s loan has supported the Belarusian government in funding and implementation social and modernization budgetary projects. The authorities has received an IMF loan for support of balance of payments and introduction of economic reforms, which in actual fact haven’t took place.
A special, less significant part of indebtedness consists of loans from other organisations and institutes and also interest on state-issued securities.
External debt is a considerable price which Belarus should pay for the inability to run the economy efficiently. Furthermore the expenses required for service of external loans in 2013 are greater than such budget items as the expenses for national defence or education.
Where to Find More Money
To relieve its debt load Belarus intends to attract new foreign loans in the amount of about $1,5 bln in 2013. The experts believe that country will be able to repay the other half of the debt using its own funds, but only in case it will manage to balance its foreign trade.
On 2 November, The Minister of Finance of Belarus Andrey Kharkavets expressed the same opinion at the meeting of the House of Representative: “We are looking for possibilities to cope with these payments … we are planning to finish the next year with a surplus in balance of trade.”
Therefore, the Ministry of Finance is planning to attract the resources of EurAsES Anti-crisis Fund – $0,9 bln, and issue new Eurobonds – $0,6 bln.
It should be noted that one of the EurAsES’s loan condition is annual privatisation of state assets in the amount of no less than $2,5 bln. According to analysts, currently Belarus is not prepared for large-scale privatisation projects. The explanatory note to the new budget proves it: "The most significant and at the same time the most difficult for implementation among the means of foreign liabilities’ funding is the sale of the state property to foreign investors”. That is why EurAsES’s loan may to a large extent depend on the political mood of Russia.
On the other hand the authorities officially announce that "on behalf of the President the Government has removed all restrictions related to the privatisation of state property". This statement Mikhail Myasnikovich made at the Belarusian Investment Forum on 15 November. The Prime Minister also noted that the country have not fulfilled the plan for income from privatisation this year. Also the official promised that the story of Spartak and Komunarka will not happen to any other Belarusian company.
The issuance of Eurobonds is a rather expensive way to finance foreign debt, but the MF supports it. On 29 October, the Chief of the IMF Mission in Belarus David Hoffman claimed: “We would support such borrowing in the short term”. However the expert emphasised, that the government should take care of the lowest price of this entertainment.
The main advantage of bonds is that apart from payment of interest they do not require fulfilment of other conditions on the part of the borrower, unlike, for instance, EurAsES loan. However, even more useful government bonds will not make a perfect way of the current debt refinancing.
Althernatives
At the same time the authorities try to find the alternative loans on the national market issuing the three-year government bonds at 7,5% warrant. According to the Deputy Minister of Finance Maksim Yermalovich the sale of government bonds on the national market will be continued. Moreover physical parties will also be entitled to purchase such securities.
Obviously, the best alternative for the country could be IMF’s loan resources which the government can borrow at the rate of 2-3% per annum. However, in such case Belarus will have to present a modernization program the implementation of which the Fund would agree to finance. According to the latest press-release of the IMF Mission in Belarus, ones of the key directions of change should be privatisation of state enterprises and limitation of subsidising various state programmes.
It is very difficult to imagine that Belarus will refuse to finance government programmes, which still remain the “backbone” of the country's economy. On the other hand the authorities probably will not agree or rather will be unable to launch privatisation in the way the found suggests it. An offstage but still necessary measure in case of crediting will likely be the demand to release political prisoners. The prisoners may become a tool in hands of Belarusian regime during the negotiations over financial aid.
What will happen
Therefore, two possible scenarios may be proposed.
The least likely one is that Belarus will not receive a loan from EurAsES and will not be able to significantly fill the hollow $0,9 bln large with other borrowed resources. In such case one should expect another crisis with escalation of inflation and serious fall in the rate of the national currency.
The most likely option is, however, that the country will receive the planned loans and issue bonds on both national and foreign markets. Thus, the current cheaper loan will be substituted by a more expensive one subject to the option of further repayment. One can only hope that the government of Belarus will reconsider its economic policy in the meantime. That could not only make the economy more efficient, but also enable the government to get "cheap" money from the IMF.
Zhenia Tsikhanovich
Bialiatski, Belsat, Liberal Club – Digest of Civil Society
Ales Bialiatski
Notable events last week included transfer by Ales Bialiatski of his prize to Belarusian human rights defenders, reduction of Belsat broadcasting, and a new Belarusian initiative in Prague.
Ales Bialiatski awarded the Prize of the Peter Kelly. The ceremony was held on November 22, in Berlin. The award was given to a political prisoner Ales Bialiatski to recognize his merits in defending human rights in authoritarian Belarus. Ales Bialiatski refused to accept monetary component 10,000 euro, asking to transfer the funds to support human rights activity in Belarus.
Belsat reduces broadcasting. From November 26, the Warsaw-based independent TV channel Belsat is downsizing its broadcasting mode. Almost all of the regular programs are to leave in the forced vacation because they have no funding to the end of the year.
Liberal Club conference. On November 24, the International conference "In Defense of Liberalism in Eastern Europe" took place in the Minsk hotel "Europe". The conference is organised by NGO "Liberal Club" and aims to further develop the network of liberalism's supporters in Eastern Europe.
New centre of Belarusian emigration. On November 20, in Prague, six Belarusian organisations reached an agreement to cooperate as an "Alternative Belarusian Embassy" in the Czech Republic: Association "For Modernization", "Nash Dom", the NGO "Pahonia", etc. In response, the NGO of Czech Belarusians "Pahonia" made a statement that the aforementioned meeting was "nothing more but a theatrical ostentatious staging, directed by political refugee Alexei Mikhalevich aimed to show him as a leader of the Belarusians in the Czech Republic".
Drupal-sliot. On December 15-16, in Minsk, the youth NGO "Falanster" conducts the 2nd Drupal-sliot. The event is organised as a social event which is to strengthen horizontal connections in the environment of drupal-developers (Drupal is an open source content management system) as well as other open source communities.
Green Alliance celebrated 5-year anniversary. On November 22, at the Minsk Gallery "Ў", the first Belarusian association of environmental organisations, activists and experts "Green Alliance" celebrated its 5-year anniversary. The activists presented the results of the current campaigns and introduced a new concept of "Green Alliance" – the development of regional networks to launch a broad national environmental movement.
The best video about CSO organisational capacity. Belarus’ Capacity Building Market place was awarded in the framework of the 1st Forum of Organisational Development, which was held on November 19-20, 2012 in Kiev. The team of the Belarus’ Marketplace won the video contest "CSO organisational capacity" with a video report about the First Fair of Capacity Building in Minsk, on October 12, 2012.
Budzma’s talk shows. On November 21, in Mogilev, the campaign "Budzma" ("Be Belarusians!") began a series of talk shows and public presentations under the title "Culture improves life!", which are planned to be conducted in all Belarusian regions. The Mogilev talk show "The CIS Cultural Capital: initiative from top or bottom?" was devoted to the issue of giving the city the status of the CIS cultural capital in 2013.
Informal legal school for Roma people to be arranged in Gomel. On November 19, Gomel human rights activists announced the opening of a legal school for Roma. The decision was made based on the results of a roundtable discussion on Roma-related discrimination.
The 2nd Forum of Belarusian cyclists took place in Hrodna on November 24-25. The purpose of the Forum is to bring together the cyclists of Hroda and Belarus in order to influence the development of urban infrastructure. The Forum is organised by the “Velo-Grodno” initiative.
Weekend GDF events in Gomel. On November 24, Gomel Democratic Forum (GDF) hosts a round table devoted to youth politics in Belarus and organized by the movement "For Freedom". On November 25, GDF conducts a meeting of the youth club "Civilization" on the development of volunteerism in Homel region.
Roundtable on anonymous donations. On November 28, Legal Transformation Center and the Assembly of pro-Democratic NGOs conduct a roundtable "Anonymous donations in Belarus". The event will present an overview of the legal regulation and practical situation with anonymous donations in Belarus and abroad.
Educational websites' competition. 18 Belarusian websites take part in the "Best Website / Blog of non-formal education for 2010-2012". One of the nominees is a blog of the Golden Age University project aimed at working with the social, intellectual, and physical revitalization of Grodno elderly residents. Voting is available on the website of the 4th Festival of Non-Formal Education that will be held on December 7-9, 2012.
Forum of Volunteers in Minsk. On December 4, the 5th International Forum of Volunteers is to take place in Minsk International Education Center (IBB) The Forum focuses primarily on volunteer work with the elderly, in particular witnesses of the events of the II World War, as well as on interaction between the generations.
Small grant competition for Minsk and Minsk region. Registered and non-registered CSOs of Minsk and Minsk region are invited to participate in the competition of small grants "Support of civil initiatives that strengthen the values of democracy and independence". The aim of the competition is to expand the values in civil activities. The maximum grant amount is $1,000.According to the newsletter belngo.info
Literature as tag clouds. KYKY.org established its method of reading of literary texts and transformed 10 classic pieces of Belarusian literature into the tag clouds. The results showed that the Belarusian literature revolves around the word 'WHAT'.
Belarus Digest prepared this overview on the basis of materials provided by Pact. This digest attempts to give a richer picture of the recent political and civil society events in Belarus. It often goes beyond the hot stories already available in English-language media.
