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Lukashenka's Regime Is An Economic Bankrupt

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Lukashenka's Regime Is An Economic Bankrupt

The government has no sources of income to pay debts.

According to the balance of payments in the I quarter this year, in January-June the external debt of Belarus reduced by $42.7 million and as of July 1 equaled to $38.2 billion. In per capita terms it fell to 4$.022.7 from $4.0276 from the beginning of the year, Belrynok informs.

The revenue from exports and customs duties do not cover the external debt

Moreover, the net external debt of Belarus, i.e. the difference between gross external debt and the cost of the country's external assets, increased only by $23.7 million and reached $25.9 billion in the first six months.

The better situation is with the gross external debt service. In the first half this year it was spent $3 bln for this purpose, which made 21.2% of the value of exports of goods and services. Thus, the repayment of a principal debt took $2.3 billion, and interest and other payments - $0.7 billion. For the same period last year it was spent $3.1 billion and $687.7 on debt and interest repayment respectively. That is, this year it has been spent been less money for debt repayment than a year ago, and interest payments took away nearly the same.

Thus, in general, there is a quiet favorable picture - foreign debt of Belarus and payments on it have stabilized. However, the situation is actually as not rosy as it may seem, within six months the Belarusian economy has substantially lost the ground, so the debt service is becoming more difficult than ever before.

In particular, the ratio of the gross external debt to GDP increased in the first six months by 7.1 percentage points and reached 76.7%. And the ratio of the gross external debt to exports of goods and services increased by 10.3 percentage points and reached 126.9%.

In addition, it must be understood that the external debt is not the only obligation towards the world. They include direct investments from abroad in the form of equity and related investments, as well as portfolio investments of non-residents in shares of Belarusian joint stock companies, and commitments arising from derivative financial instruments. As of this July 1 such parameters amounted to $16.7 billion, $27.6 million and $1 million respectively. As a result, according to the National Bank of Belarus, obligations towards the world increased by $0.4 billion in the first half this year and amounted to $54.9 billion.

A year ago, direct investments from abroad equaled to $16.6 billion, portfolio investments made up $26.8 million, and the obligations arising from derivative financial instruments - $15.1 million. As you can see, no visible dynamics is observed here, although the government is set to increase direct investments to the country (as opposed to the external debt).

The situation with direct investments is gradually deteriorating. Over the past six months direct investments to Belarus in view of withdrawal equaled to $888.8 million, which was 37.2% less than in the I half last year. Moreover, the most part of the sum was simply reinvested by profit of non-residents earned by their subsidiaries in the territory of the Republic of Belarus: $669.6 million. The amount of reinvestments turned to be 40.1% less than in the same period last year. And the volume of direct investments in the form of equity (including withdrawals) slightly increased and amounted to only $129.7 million, as it was in the first half of 2015, when that parameter equaled to $128 million.

This year the number of external assets in Belarus has increased, but only by $84 million. And now they reached $13.6 billion. They do not make much profit, in this January-June investment income based on foreign assets amounted only to $71.8 million.

Customs duties divided between Belarus and Russia do not save the situation as well. According to the balance of payments, in the first six months this year current payments received by the government of Belarus (including distribution of customs duties between the states-members of the EAEC) equaled to $92.1 million, and other sectors of the economy had $214.5 million. At the same time, current foreign payments on the part of the government of Belarus amounted to $239.8 million, and other sectors - $187.3 million. As a result, foreign income exceeded foreign payments only by $179.5 million.

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