The authorities spend new loans on paying the old ones.
Well-known Belarusian economist Leanid Zlotnikau said it in an interview with charter97.org.
– The Belarusian Ministry of Finance and VTB Bank are discussing the issue on giving a bridge loan of up to $2 billion dollars. Mr Zlotnikau, what do they mean? Russia gave Belarus a $2 billion loan at the end of last year, and Putin promised Lukashenka in May to lend the same sum.
– The matter is that Russia promised at the end of last year to issue a $2 billion state loan. But it wasn't able to give the whole sum of money, so the commercial bank urgently gave 450 million dollars. They issued a bridge loan on the last day of December so that we can live until we receive the state loan. It now occurs that Russia doesn't give the promised state loan again. So, the Ministry of Finance and VTB Bank are discussing the issuing of a new bridge loan, though it was reported earlier that it can be given by the middle of June.
– How will this money be spent?
– We spend all loans to replenish the gold and foreign currency reserves. This is the main aim. Of course, we then spend the rest on paying the state loans. To sum up, we spend the money on paying the loans of all economic entities.
– Do you mean that the authorities pay old loans with new ones?
– Exactly. The state pays its old loans at the expense of new ones.
– What is the state of the country's gold and foreign currency reserves? Do we have any grounds to worry?
– In terms of freely convertible currencies, they are about 5.3 billion dollars, but in early 2013 they were about 8 billion. They have declined for 18 months and continue to decline. The minimum decrease was in May, but they had been falling 300-400 billion dollars per month.
– Does it mean the red line is close?
– According to standards, the gold and foreign currencies reserves should be equal to three months of imports. They were equal to two months of imports at the beginning of the year and keep at this level now. There is a danger that if the reserves fell to 1.8 months of import, as it was in spring 2011, we will face a collapse and devaluation. We are close to the level at which we had a default.