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Deutsche Welle: Belarus will not be able to pay its debts

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Deutsche Welle: Belarus will not be able to pay its debts

In 2012, Belarus has to repay more than 1.5 billion dollars of foreign debts.

However, it seems that it has no means to pay obligations, and large foreign loans are not yet in sight, reports Deutsche Welle.

This year, Belarus will have to repay in total $ 1.6 billion of foreign debts. In total the foreign debt of Belarus at the moment is about $ 11 billion. In 2013, the country will have the obligation to service foreign debts amounting to more than $ 3 billion, reported the Finance Minister of Belarus Andrei Kharkavets.

In his turn, the former head of the National Bank Stanislau Bagdankevich notes that the specific terms of repayment of external debts of Belarus has not yet been published. Commercial banks, according to Bagdankevich, also have large debts. The situation is also exacerbated by large deposits of non-residents of Belarus, who are ready at any moment to withdraw funds from the accounts and put them out of the country.

In addition, this fall the country will have to repay the "Belaruskali" debt of 1 billion dollars.

A syndicated loan was given in 2011 to the company by the Russian Sberbank in conjunction with the Eurasian Bank for Reconstruction and Development (EBRD). The question arises: where the government is going to get money to repay the loans?

What the authorities hope for?

As the economist Leu Margolin points out, now the authorities are hoping for provision of the next tranche of the Anti-Crisis Fund (ACF) of the EEC in amount of 440 million dollars. The Belarusian government has already warned the EEC ACF about the decrease of the country's gold reserves to 6.4 billion dollars to October 1, 2012. These funds will be spent on repayment of foreign and domestic obligations. Nevertheless, authorities hope to restore the reserves to $ 8 billion by the end of the year. The main hopes are laid on the fourth and fifth tranches of the ACF.

However, according to Margolin, this won’t solve all the problems. In addition, Lukashenka insists on increasing the salaries of state employees before the parliamentary elections. This action, says the economist, will make repayments even more problematic.

Expert of the Liberal Club Eugene Preygerman believes that the government can hardly expect anything else but the next tranche of the ACF. According to the economist, the government has made a bet on the outside investors, including direct investment, but so far there is no significant progress in this direction.

Problems also remain with Belarusian Eurobonds, while the yield on them compared to the previous year has slightly decreased. According to Preygerman, it will be complicated to place them on foreign markets under current conditions. With regard to possible Chinese loans, they are usually connected with specific investment projects. Therefore, it is practically impossible to include these loans to the gold reserves.

Internal reserves

The authorities are already trying to find some means within the country. As stated in a letter of the National Bank and the Government of Belarus to the ACF, it is expected in 2012 to increase tariffs on utility services to the level of compensation for their costs by 35 percent. At the results of June the figure was 23 percent. Also will be increased payment for public transport services - from 34.2 percent in Minsk and 53 percent in regions up to 85 percent of their cost.

Meanwhile, these requirements are in terms of the loan along with the requirements of the ACF of privatization of state property in 2012 on 2.5 billion dollars. The last requirement Belarusian authorities do not hurry to perform.

The authorities do not want privatization

According to Eugene Preygerman, privatization is one of the main ways to get hard currency. But after the abolition of the lists of businesses, which was planned to privatize in 2012 and later, it's hard to say what of the state property the authorities are willing to give to the private sector. The expert believes that the official Minsk will not go on the sale of such giants as "Belaruskali" because they are major providers of foreign currency to the treasury.

As economist Leu Margolin suggests, the government is well aware that privatization may turn against him. The loss of economic influence would mean the loss of political power, which the Belarusian president will not allow. "Lukashenka is intuitively afraid of privatization, fearing to lose the command levers in the economy", - said Margolin. However, Russia, represented by the ACF, will insist on the privatization of Belarusian state property, predicts the economist.

One cannot count on the West

Leu Margolin believes that today it’s senseless for the official Minsk to hope for assistance from the International Monetary Fund (IMF), World Bank (WB), European Bank for Reconstruction and Development (EBRD) and other influential financial institutions.

One must fulfill two conditions for such cooperation, stresses Margolin. These are reform of the economy, on which insists the ACF, and democratization. Despite the fact that democratization is not mentioned in the charters of the IMF and the EBRD, for specific programs vote members of the boards of directors. And they, in turn, represent specific countries, where questions of democracy are not an empty phrase. According to Stanislau Bagdankevich, the first step on the way to cooperation with international financial institutions could be the release of political prisoners.

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