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13.01.2014

Belarus spent $1 billion on patching foreign reserve hole  ? 43

15:06, — Economics
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Belarus spent $1 billion on patching foreign reserve hole

The authorities fear another panic outburst in foreign exchange market.

Because of that they intentionally conceal from the public the amount of the loan, obtained late last year, which, according to the National Bank, was issued by the Russian state bank VTB. Also being concealed is its share, spent on supporting the countrys foreign reserve, AFN reports.

Such a conclusion can be made based on the analysis of statistical data, published by the National Bank, and the cashflow of Belarus foreign reserve, for patching the hole in which at least $1 billion was needed in December.

The National Bank was the first to announce that Belarus received a certain Russian loan already in December, as it gladly reported about the increase of the foreign reserve by $192.2 million and explained the reasons for it.

The foreign reserve increased due to . . . receiving the first part of a loan from the Russian Federation, - the National Bank reported.

The official statement did not specify the amount of the loan. The sources of the media among the government reported of an alleged loan of $450 million.

Later on the same day, 4 January, the head of the National Bank Nadzieja Jermakova claimed that the first part of the Russian $450 million loan had come. She obviously made a mistake having mentioned the amount of the latest tranche of the Eurasian Economic Communitys Anti-Crisis Funds loan, which Belarus will get at earliest in the second half of 2014. However, no one corrected her.

Obviously, it was not the matter of the Russian interstate loan the amendments to the Russian budget allowing for proving Belarus with $450 million of the $2 billion loan, promised by Vladimit Putin, will only be made in summer. Consequently, the money could only have been provided by a commercial bank, having provided Belarus with a bridge-loan. From the 2013 budget amendments it is clear that the creditor is the Russian state bank VTB.

Belarusian authorities skilfully hid behind the amount of $450 million, announced after Putin and Lukashenkas negotiations in December, having denied any comments on the topic. They did not have any other choice but to avoid another panic outburst in the foreign exchange market. One may only assume, which of the possible news about the loan would cause a greater panic that VTB provided at least $1 billion for patching the hole in Belarus foreign reserve, or that the foreign reserve shrank in December by $800 million.

Lets list foreign currency expenditures in December: $252.6 million was spent on the maintenance of the IMF loan, $53 million was spent by the Finance Ministry on the retirement of bonds held by natural persons. Belarusian enterprises and non-residents bought $99.2 million net. For another $475.3 of the National Banks reserve was accountable the populations demand for foreign currency.

Thus, the joint foreign currency expenditure in December amounted to $880 million, while the income was mere $59.8 million: $50 million for treasure bonds is foreign currency, and another $9.8 million for treasure bonds sold to the population.

For the foreign reserve at the same time to grow by $192.2 million, Belarus needed the VTB loan in the amount of at least $1 billion ($1 bln + $59.8 mln $880.1 mln = $179.1 mln).

It is weird that the Russian VTB remains silent. Being a public stock-company it must have long informed the market of the deal with the Finance Ministry of Belarus.

Also silent is the Finance Ministry of Belarus, to which it is advantageous to remain silent in the case if the amount of VTBs loan accounts for $2 billion the provision of a loan exactly for such amount has been discussed by the Belarusian authorities with VTB since 2010.

However, the officials should be reminded that any information of the external debt is public and cannot be protected by classification stamps etc.

It is also worth pointing out that this is a loan, not Russias payment for Belarus integration attempts. This loan will have to be paid back.


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