Stanislau Bahdankevich: Moscow to cut subsidies for Belarus

Belarus's gold and foreign exchange reserves continue to melt despite a new Russian loan.

Former chief of the Belarusian National Bank Stanislau Bahdankevich says Belarus will continue to live on foreign loans, but Russian subsidies will be cut, Radio Racyja reports.

Belarus received a huge Russian state loan of $1.5bn in September. The loan was spent on restructuring the government debt.

The country continues to spend its gold and foreign exchange reserves. Their volume fell by 285mn dollars in September to reach $6.004bn on October 1.

The country's gold and foreign exchange reserves have declined by $646mn since the beginning of the year. Belarus's gross foreign debt continue to grow and may rise by nearly $3bn this year.

“We take new loans to pay off the old ones. Everyone knows it. It is a vicious circle. Out debts are growing. We have been living on Russian subsidies, foreign tranches and the state assets we sell as part of privatisation. The Belarusian government apparently doesn't see other ways out. The economy is weak. Of course, our government is happy that Moscow imposed sanctions (a ban on the import of certain products from the West) that actually hit Russia. But it turned out that Russia's faced a recession and outflow of capital. So, we have some disadvantages to our advantages. We delivered Russia more goods, but receive less money. I mean both agricultural products and industry. It hits the Belarusian economy. We cannot hope for the modernisation. It has been continuing for many years, but we don't see any results. The losses are huge, and they continue to grow. The goal of any economy is to make profit. Out country uses administrative tools to keep the economy afloat due to more successful sectors and the growth of the external debt and foreign reserves,” Stanislau Bahdankevich said.

Asked if Belarus would have to ask for a new loan from Moscow next year, the former head of the National Bank said: “It's possible that Moscow won't give it, because Russia has its own problems. The West imposed sanctions against the Kremlin and refuses to give short-term loans to Russian banks. Russia took a lot of loans and it must return them. They don't have opportunities to take new tranches to return the old ones. They think how to solve their own problems. It's obvious that Moscow will cut subsidies for Belarus.”