Electronic reporting / 09.04.2020

How much does Belarus owe Russia? What is the external debt of Belarus and to whom does the country owe it?

Up $1 billion to a record $13.5 billion. The debt burden on the economy, experts say, is constantly growing, and therefore the amounts that the country has to repay to creditors annually are measured in billions of dollars. Naviny.by looked into who and how much Belarus owes in 2017.

Main creditors of Belarus

Since 2013, national debt costs have exceeded $3 billion annually, and 2017 will be no exception.

Next year, servicing the state debt will cost 2 billion 496.3 million denominated rubles, and 5 billion 232.2 million denominated rubles will need to be spent on its repayment. Thus, the total liabilities of the government amount to about 7.7 billion rubles.

In currency equivalent (the average annual exchange rate included in the 2017 budget is almost 2 rubles 20 kopecks per dollar), it turns out that Belarus will have to repay about $3.5 billion in internal and external public debt in 2017.

At the same time, expenses for internal and external public debt are planned to be almost equal: about $1.65 billion will need to be spent on servicing and repaying internal public debt, and $1.86 billion will be spent on payments on external debt.

According to BelaPAN, the largest external creditors to whom Belarus will have to repay in 2017 largest amounts, are Russia ($741.3 million), the Eurasian Fund for Stabilization and Development ($487.9 million), and China ($381.7 million).

Belarus must transfer about $1.5 billion next year to these three creditors, that is, almost 80% of the total costs of external public debt. At the same time, given that Russia is the main donor of the Eurasian Fund, we can say that it is the main external creditor of Belarus.

As for the creditors who lend the Belarusian government money on the domestic market, then, according to unofficial information, they are commercial banks With Russian capital who regularly buy foreign currency government bonds of the Belarusian Ministry of Finance.

If we talk about the funds that the state plans to use next year to repay and service the national debt, the 2017 budget provides for the following amounts for these purposes: proceeds from the placement of a new issue of Eurobonds ($800 million), tranches of a loan from the Eurasian Fund for Stabilization and Development ( $700 million), funds from the placement of foreign currency government bonds on the domestic market (another $360 million).

In addition, it is planned to use the budget surplus (1.5 billion rubles) to pay off debts in 2017, which is planned to be obtained mainly from the receipt of export duties on petroleum products into the budget.

It is also very likely that part of the obligations under internal debts the government will try to refinance - Belarusian banks, as has happened before, they will offer to buy new issues of foreign currency government bonds, the proceeds from which will be used to repay previous issues of debt securities.

The debt burden on the economy is growing

The state's ability to pay debts is directly related to the performance of the economy, which has not been encouraging lately. According to the forecast of the IPM Research Center, Belarus' GDP will decrease by 2.8% in 2016, and the recession may continue in 2017 (the center's experts suggest that the economy will shrink by 0.9% next year).

At the same time, the value government debt is increasing - in January-October 2016, external public debt increased by approximately $1 billion (or 8.2%) and reached $13.5 billion.

“The debt burden on the economy is growing. On the one hand, there has been a recession this year, on the other, the devaluation that has taken place has led to a noticeable decrease in GDP in dollar equivalent, and the amount of public debt has increased against this background,”— the scientific director of the IPM Research Center stated in a commentary for BelaPAN Irina Tochitskaya.

According to estimates by the IPM Research Center, the GDP of Belarus in dollar equivalent in 2016 will be (at the average annual rate) $46.5 billion. For comparison: in 2015, GDP was equal to $54.6 billion.

The growth of public debt, observed against the backdrop of a recession and a decrease in GDP in dollar equivalent, will most likely lead to the fact that at the end of 2016 one of the parameters will not be met in Belarus economic security— threshold value reflecting the ratio of external public debt to GDP.

As of January 1, 2016, according to the Ministry of Finance, the ratio of external public debt to GDP was 22.7%. As of January 1, 2017, this value could reach 29% (provided that the external public debt remains at the level of $13.5 billion and GDP is projected at $46.5 billion). By the way, according to the economic security parameters given on the Ministry of Finance website, external public debt in relation to GDP should not exceed 25%.

According to experts, the country did not have the opportunity to reduce the debt burden on the economy this year.

“The growing debt burden on the economy is an alarming trend. However, it is unlikely that the situation could have developed differently this year. We see that the economy is not generating growth, and against this background it is almost impossible to reduce the debt burden,” senior analyst believes forex broker Club Valery Polkhovsky.

A year ago, representatives of the Belarusian government stated that at least half of the foreign currency debt would be paid from its own sources, and the other half would be refinanced.

However, the official economic forecast for 2016, experts note, was very optimistic, and therefore plans to pay off debts by minimizing the attraction of new borrowings could not be realized.

“Initially, economic growth was officially forecast at 0.3%, but in fact the decline in GDP is almost 3%. Budget oil revenues in 2016 also turned out to be lower than the government planned due to lower prices. Therefore, the ability to pay off debts from one’s own sources turned out to be less than expected,”

Russia and Belarus approached the next anniversary of their Union in the context of a crisis in bilateral relations. RBC estimated how much it costs Russia to maintain “special relations” with Minsk

Vladimir Putin and Alexander Lukashenko (Photo: Mikhail Klementyev / RIA Novosti / AP)

April 2 marks the 20th anniversary of the Union of Russia and Belarus, but the “fraternal” states are celebrating the anniversary at the lowest point in their relations for at least the last six to seven years. Belarusian-Russian relations are experiencing “a full-scale complex crisis, which includes both disagreements on specific issues of economic content and contradictions on fundamental issues of a strategic and military-political nature,” says the Minsk Center for Strategic and Foreign Policy Studies. Shortly before the anniversary of the Union, in February, President of Belarus Alexander Lukashenko complained that Russia was “kicking in the tail and mane” of the agreements between the two countries, including on the issue of the price of Russian gas. One of the reasons for this behavior of Moscow, according to Lukashenko, is certain forces in the Russian establishment, but not President Vladimir Putin, whom Lukashenko called his “brother” on March 28 (they will meet in St. Petersburg on April 3).

More than $100 billion in 11 years

The Kremlin on the same day when Lukashenko scolded for 15 minutes straight at his big press conference Russian authorities, from which it follows that “the Russian side has provided and continues to provide large-scale economic, political and other assistance to Belarus.” As an example, the Kremlin press service cited the allocation of over $6 billion in loans to Minsk in various directions and annual duty-free oil supplies in the period from 2011 to 2015 in the amount of 18 million to 23 million tons. “In total, our Russian budget during this period received less than $22, 3 billion. All this is nothing more than direct and indirect support for our union Belarusian state,” the statement said.

What is the real scale of Belarus' economic dependence on Russia? “If you look at the figures presented by the IMF, you will see impressive figures of hidden and direct support for the Belarusian economy,” Putin hinted at a press conference in Bishkek at the end of February. Indeed, the IMF in September 2016 estimated total Russian support for the Belarusian economy at $106 billion for the period 2005-2015 alone, or about $9.7 billion per year ( see infographic). Over the years, the volume of “total net support” from Russia varied from 11 to 27% of Belarusian GDP, according to IMF data provided by RBC. But it is clear that in last years Russian aid to the Belarusian economy is dwindling, which may partly explain Lukashenko's latest grievance.

The model of relations can be simplistically described as follows: “financial and economic support is exchanged for a certain degree of political loyalty on the part of Belarus,” says a senior economist Raiffeisen Bank International for Central and Eastern Europe Andreas Schwabe. “The Belarusian economy is unstable without Russian support. It’s amazing how President Lukashenko managed to ensure continuous Russian support for such a long time, 20-25 years,” Schwabe told RBC. But lately Belarus has been showing signs of “political disloyalty” (does not support Russia’s Ukrainian policy, counter-sanctions), and Russia is beginning to limit financial and economic support (reduces oil supplies to Belarus, increases gas prices, reduces purchases of Belarusian industrial goods), the economist argues , stipulating that, despite all the differences, the fundamental relations between Russia and Belarus remain “surprisingly stable.”

The IMF considers total support as the sum of two components - hidden subsidies due to discounts on Russian energy resources and pure financial support. This turns out to be the broadest assessment, since the IMF’s financial support takes into account not only interstate loans, but also the balance of mutual direct investments, as well as loans for Minsk through the Eurasian Fund for Stabilization and Development (EFSD, the former EurAsEC anti-crisis fund), the resources of which are 88% formed Russian contributions(at the end of 2015, Minsk owed the fund $1.94 billion, and in 2016 it borrowed another $800 million).

State aid

This approach may not be entirely fair if it is government financial assistance that needs to be assessed, says ACRA analyst Dmitry Kulikov, among direct foreign investment there are private ones, they can bring real income when dividends or interest are returned to Russia. In his opinion, it would be reasonable to take for the calculation the debt of Belarus on state loans (including loans from Russian state banks to the Belarusian government) and the amount of accumulated subsidies for oil and gas supplies, and not take into account direct investments.

Belarus' debt on intergovernmental loans from Russia at the end of 2015 amounted to $6.02 billion, as follows from the balance of payments of the union state, available on the website of the Bank of Russia (there is no review for 2016 yet). The Russian Ministry of Finance refused to disclose to RBC the current debt of the Belarusian government, and the Ministry of Finance of Belarus did not respond to RBC’s request. The last time an intergovernmental loan was publicly announced was in July 2015, when Minsk received Russian loan by $760 million. As follows from the balance of payments of Belarus with Russia for 2016 (available on the website of the Belarusian National Bank), last year the net borrowings of the Belarusian government in Russia amounted to $250 million, but these could have been loans from Russian state banks. Their help is a large channel for Russian injections into the Belarusian economy.

In 2012, Vnesheconombank agreed to provide Belarus with up to $10 billion for the construction of the Belarusian nuclear power plant under an intergovernmental agreement, but so far only the first tranche in the amount of $500 million has been allocated (in May 2014), and only $248 million has been selected from it, VEB head Sergei Gorkov said in December . Sberbank lent to the state-owned Belaruskali for $900 million in 2011 and $550 million in 2015. Overall as of October 1 Russian banks held assets worth $4.9 billion in Belarus (less their liabilities there - $3.7 billion). VEB, Sberbank and Gazprombank did not respond to RBC’s requests, and VTB reported that the portfolio of loans of its Belarusian “daughter” to local enterprises with state participation amounts to Belarusian rubles about $75 million

Largest investor

Direct investment (FDI) of Russia in the Belarusian economy takes from 57 before 64% total foreign investments in the country, according to the National Bank of Belarus for 2010-2015. At the same time, Russian FDI in Belarus is declining, statistics from the Russian Central Bank show (see infographic): net accumulated investment reached its peak in 2010 ( $5.6 billion), and as of October 1, 2016 they were $3.4 billion.

Official Russian statistics underestimates the volume of investments in Belarus, says the Center for Integration Studies of the Eurasian Development Bank (EDB), which conducts its own monitoring of mutual direct investments in the CIS. If, according to the Central Bank, the amount of accumulated investment from Russia to Belarus in 2015 was $3.6 billion, then EDB monitoring shows the figure $8.3 billion. The Bank, among other things, analyzes corporate reporting and media reports; in addition, unlike the Russian regulator, it takes into account investments through offshore companies and other “transshipment bases” of capital. The Central Bank indicator includes exchange rates, market revaluations and other changes.

Belarus is the leader in Russian incoming investment among the countries of the Eurasian economic union. However, this happened mainly due to Gazprom’s purchase of the Beltransgaz company (now Gazprom Transgaz Belarus), for which the concern spent $5 billion between 2007 and 2011. Other significant Russian projects— investments in the subsidiaries of VEB and MTS, in the Transneft main pipeline and the Mozyr Oil Refinery.

How much does Russia lose?

Up to 90% economic support Belarus from Russia, in the understanding of the IMF, accounts for hidden subsidies for the supply of gas, oil and petroleum products. Sergei Agibalov, head of the Economics and Finance sector at the Institute of Energy and Finance, estimates that the total volume of Russian subsidies to Belarus with preferential energy supplies since the early 2000s amounted to almost $100 billion, or over 200% of Belarusian GDP in 2016. Subsidies for gas in 2001-2016 amounted to $49.4 billion, for oil - $46.9 billion, according to Agibalov’s calculations for RBC. And unlike loans, which are repaid with interest, oil and gas benefits for Belarus are irrecoverable indirect losses Russian budget. “This is not wasted money for us - these are calculated steps based on future result“Vladimir Putin assured at the end of February.

“All the years of independence, Belarus received gas from Russia exclusively favorable conditions“In some years, it bought gas several times cheaper than all neighboring European countries,” Agibalov. He calculates the gas benefit as the difference in the price of imports with Germany (this is a comparable large consumer; the price of Russian gas on the border with Germany is published in open sources, and it can be considered a market competitive price, he explains). But in 2016, gas subsidies fell sharply - to just $350 million from $2.2 billion a year earlier, according to Agibalov’s calculations; and by the end of March 2017, the Russian authorities had already counted $700 million in debt to Belarus for gas supplied.

Russia supplies Belarus with crude oil duty-free, and refined petroleum products are supplied abroad by Belarus with a duty collected and credited to the Belarusian budget. Russian subsidies have recently decreased due to the nature of the export duty. The decline in world oil prices leads to a smaller decline in prices for the import of crude oil that Belarus imports from Russia, compared to a decline in prices for petroleum products that Belarus exports - this is a consequence of the tax maneuver in the Russian oil industry, explains the Eurasian Development Bank. “At high oil prices, Belarus bought it at half the price market price, and now it’s 25% cheaper,” says Alexander Knobel, director of the Center for International Trade Research at RANEPA. — Russia depends on oil and gas, and Belarus is just as dependent on the Russian oil and gas environment. If it gets worse, the problems get worse.”

Will Belarus be able to leave Russia?

Against the backdrop of a reduction in Russian economic support, Minsk is trying to diversify sources of financial assistance and foreign trade based on Russia, but this is difficult to do, notes leading expert of the HSE Development Center Sergei Pukhov. Since 2015, Belarus has been negotiating with the IMF on a potential loan of up to $3 billion, and the EU sanctions lifted from the country in 2016, in principle, opened up the possibility for loans from European Bank Reconstruction and Development (EBRD) and the European Investment Bank.

“In terms of trade, Belarus, of course, is trying to diversify its exports, establish supplies to EU countries, and does not want to lose the Ukrainian market under any circumstances,” adds Alexander Knobel. “Russia for Belarus is half of trade, the other half is Ukraine, the European Union (mainly Poland and the Baltic states), Russia is the main partner, but Minsk wants to reduce this share and increase its presence in European markets.”

But Andreas Schwabe says that under Lukashenko, Belarus is unlikely to be able to turn its back on Russia. “The West, in exchange for significant financial support, will probably demand from Minsk economic reforms, which would weaken Lukashenko’s control over the economy and the state as a whole - and this is unacceptable for him,” the economist argues. And Russia, after 2014, has shown through its policy in the post-Soviet space that it will not “allow” Belarus to take such a step.

With the participation of Oleg Makarov

10.03.2020

Country's external debt- this is the sum of all obligations of its subjects to foreign creditors.

There is a developed international organizations classification system external debt depending on the elements included in its structure. According to the IMF (International Monetary Fund) methodology, it is customary to distinguish between:

Gross external debt - consists of the total debts of government bodies, central bank, organizations of the financial and credit system, enterprises of all forms of ownership, individuals;
Public debt is the amount of direct outstanding loans from the central government. Typically these loans are intended to cover budget deficit countries.

With this approach to public debt The obligations of the state are separated from the obligations of the central bank, other financial and credit organizations, other enterprises and individuals. Good example this: the debt problems of the auto giant Volvo, its actual bankruptcy and sale to a new owner from China, did not affect credit rating And financial stability Sweden. How appropriate this approach is for Belarus remains a matter of debate. Due to the high share of state participation in, the overwhelming majority of debts of business entities directly affect financial position countries.

The historical attitude towards external debt can be called more negative than positive. On the other hand, we should not forget that foreigners are a powerful engine economic growth, are also included in the amount of debt.

According to the Ministry of Finance of the Republic of Belarus, the following picture can be drawn of the change in the external debt of the Republic of Belarus for 2019:

	Government debt, total		External public debt		Domestic public debt
			million US dollars

*Data updated due to GDP revision

From the point of view of criteria accepted in international practice, the size of Belarus’ external debt does not exceed the established norms. External borrowings are steadily growing, but neither in absolute, nor in relative, nor in per capita terms do they look excessive. This applies to both the state debt itself and the general external debt.

Probably, the main threats to the country's economy do not lie in this area. It should be recognized that most government borrowing was not directed to industrial or commercial projects, but was used to maintain the balance of payments and restructure existing debts.

Structure of gross external debt of Belarus

The structure of the total external debt of the Republic was made up of more than half of borrowings raised since 2009. Debts from earlier periods have been almost completely repaid or converted through new loans. As of October 2015, the structure of Belarus' external debt looked like this:

Central government loans government controlled - 33,9%;
Borrowings - 4.6%;
Debts - 17.3%;
Debt of other enterprises and organizations of the Republic - 39.7%;
Direct investments in enterprises of the Republic - 4.5%.

It is obvious that the majority of external debt is institutional debt. This includes:

current debt industrial enterprises for raw materials, components and energy;
outstanding trade debt for goods supplied;
loans taken by organizations directly from external lenders.

The external debt of enterprises of the Republic was financed from many sources and has different terms and conditions of repayment. For the most part, these debts are not autonomous, since the state is among the owners of the majority of credited enterprises. Consequently, the payment ultimately also affects public interests and public funds

External debt National Bank Belarus consists of the amount of outstanding loans (received in particular from Russian banks) and bonds sold on foreign markets. At the end of 2015, the total amount of external debt of the National Bank amounted to 1.744 billion in dollar equivalent. For comparison: foreign currency debt of the National Bank of Belarus to others domestic banks amounted to 2.808 billion in the same period.

External borrowing may seem comparatively less problematic for creditors. As a rule, they have high liquidity, work organization financial institutions depends less on the form of ownership, and they themselves change owners without visible damage.

The volume of foreign direct investment in domestic enterprises. Although this is the method of raising funds that is considered the most profitable for economic system. The first reason for this situation must be recognized as the lack of real independence among enterprises in the disposal of their property and organization of activities.

The largest external borrowings of the Republic of Belarus are loans to central authorities. These same loans seem to be the most reliable for lenders, because it is the state that has the greatest capabilities at its disposal in cash and property.

To understand the situation, it will be useful to consider the structure and volumes of external borrowings by the Government of the Republic of Belarus in 2015.

Was received:

From Russian government and banks for a total of 1.572 billion in dollar equivalent;
From Chinese banks - $528.1 million. The bulk of these loans are related, i.e. can only be used to purchase Chinese goods and finance projects with the participation of the PRC;
World Bank loans amounting to $72.9 million. Almost all funds were allocated specifically to finance the construction of infrastructure and other facilities.

The total amount of government borrowing in 2015 was $2.173 billion.

In the same period, the Republic of Belarus repaid government loans totaling $2.016 billion. This figure is made up of:

$1 billion to repay the first issue of domestic Eurobonds;
$353.1 million in loan repayments from the Eurasian Fund for Stabilization and Development;
$300 million to repay a loan from the Russian government;
$147.7 million in repayments of Chinese bank loans;
$115.2 million to fully repay loans to Venezuelan banks;
$75.9 million to close the balance of the IMF loan;
$20.9 million in current payments on World Bank loans;
$3.6 million to pay the US Commodity Credit Corporation line of credit for the purchase of grain.

It can be argued that the Republic of Belarus in 2015 and in previous periods conscientiously fulfilled its debentures. Critical remarks have been and continue to be heard regarding the implementation by the Belarusian side of its obligations to reform the economy. Disagreements of this kind can significantly complicate obtaining new loans. However, it is precisely the concentration of property in the hands of the state that significantly facilitates timely repayment of external loans.

Based on this, the Republic can count on new international loans.

Dynamics of external public debt

In the first half of 2015, Belarus applied for a $3 billion loan to the Eurasian Fund for Stabilization and Development (formerly called the EurAsEC Anti-Crisis Fund), but received approval for only $2 billion. In March 2016, Belarus signed a program to attract a $2 billion EFSD loan, which is provided in seven tranches over 2016-2018. However, in order to receive a loan, the Belarusian authorities must implement a set of measures to reform the economy.

The EFRS transferred 2 tranches in 2016 in the amount of $500 million in March and $300 million in July. Belarus planned to receive the third tranche of the Eurasian loan in October 2016, but this did not happen.

The external public debt of Belarus as of January 1, 2016 amounted to $12.4 billion and decreased by 1.1% in 2015.

The limit on Belarus' external public debt in 2016 was approved in the amount of $17 billion..

In 2016, the external public debt of Belarus increased by $1 billion 198.8 million to $13.6 billion, taking into account exchange rate differences. Thus, the country’s external public debt increased by 9.6% over the year. In January-December 2016, Belarus attracted external government loans

for the amount of $1,934.9 million:

Since the beginning of 2016, repayment of external public debt amounted to $892.4 million:

In January-December 2017, external government loans were attracted in the amount of $4,040.7 million:

Repayment of external public debt since the beginning of 2017 amounted to $1,029.4 million:

In 2018, external government loans were attracted in the amount of $2,353.8 million:

Repayment of external public debt in 2018 amounted to $1,997.3 million:

In 2019, external government loans were attracted in the amount of $1,643.6 million:

Repayment of external public debt for 2019 amounted to $1,511.3 million:

External debt in Belarus in 2020 It is still impossible to speak with certainty about the prospects for external lending to the Republic this year. It is known that some preliminary work is being carried out to obtain a loan from. Belarus is discussing with the IMF the possibility of implementing a cooperation program designed for 3 years, with a loan of $3 billion at 2.28% per annum period for 10 years. The International Monetary Fund is calling on Belarus to implement a comprehensive strategy of economic reforms for state-owned enterprises to improve efficiency and productivity and reduce fiscal risks. The IMF is also recommended to identify and take consistent measures to achieve costs in the sphere of housing and communal services. This could probably explain the sharp rise in price. utilities and general tightening budget policy at the end of 2015 - beginning of 2017.

According to the Ministry of Finance of the Republic of Belarus, the external public debt of Belarus as of January 1, 2017 amounted to $13.6 billion and increased over the year by $1,198.8 million (including exchange rate differences), or by 9.6% .

According to the Ministry of Finance, the external public debt of Belarus has increased since the beginning of 2018 by $3.1 billion, or 22.6% (taking into account exchange rate differences) and amounted to $16.7 billion as of January 1.

External public debt as of January 1, 2019 amounted to 16.9 billion US dollars, having increased from the beginning of the year by 0.2 billion US dollars (taking into account exchange rate differences), or by 1.0%.

State debt as of January 1, 2020 amounted to 44.8 billion rubles, having decreased since the beginning of the year by 1.3% (0.6 billion rubles), or 33.7% of GDP with a threshold value of no more than 45% of GDP : external public debt - 27.1% of GDP, internal public debt - 6.6% of GDP. As of January 1, 2020, external public debt amounted to 17.1 billion US dollars, having increased from the beginning of the year by 0.2 billion US dollars (taking into account exchange rate differences), or by 1.4%.

on August 1 16,5 on September 1 16,6 on October 1 16,5 on November 1 16,6 on December 1 16,6 as of January 1, 2020 17,1 on February 1 16,9

Let us recall that in 2016 a program was signed to attract an EFSD loan in the amount of $2 billion, of which $800 million was issued in two tranches in 2016. The EFSD allocated another tranche of $300 million in 2017.EFSD transferred loan funds in fullduring 2016-2018.

It can be assumed that the Government of the Republic would like to repay most of the loans through new loans. Most likely this will happen.

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Main creditors of Belarus

Since 2013, national debt costs have exceeded $3 billion annually, and 2017 will be no exception.

According to BelaPAN, the largest external creditors to whom Belarus will have to repay the largest amounts in 2017 are Russia ($741.3 million), the Eurasian Fund for Stabilization and Development ($487.9 million), and China ($381.7 million). million).

As for the creditors who lend money to the Belarusian government on the domestic market, then, according to unofficial information, they are commercial banks with Russian capital, which regularly buy foreign currency government bonds of the Belarusian Ministry of Finance.

It is also very likely that they will try to refinance some of their domestic debt obligations - Belarusian banks, as has happened before, will be offered to buy new issues of foreign currency government bonds, the proceeds from which will be used to repay previous issues of debt securities.

The debt burden on the economy is growing

At the same time, the amount of public debt is increasing - in January-October 2016, external public debt increased by about $1 billion (or 8.2%) and reached $13.5 billion.

“The debt burden on the economy is growing. On the one hand, this year there is a recession, on the other hand, the devaluation that has taken place has led to a noticeable decrease in GDP in dollar equivalent, and the amount of public debt has increased against this background,” stated Irina Tochitskaya, scientific director of the IPM Research Center, in a commentary for BelaPAN.

The growth of public debt, observed against the backdrop of a recession and a decline in GDP in dollar terms, will most likely lead to the fact that at the end of 2016, one of the parameters of economic security in Belarus will not be met - the threshold value reflecting the ratio of external public debt to GDP.

According to experts, the country did not have the opportunity to reduce the debt burden on the economy this year.

“The growing debt burden on the economy is an alarming trend. However, it is unlikely that the situation could have developed differently this year. We see that the economy is not generating growth, and against this background it is almost impossible to reduce the debt burden,” says Valery Polkhovsky, senior analyst at the forex broker Forex Club.

A year ago, representatives of the Belarusian government stated that at least half of the foreign currency debt would be paid from its own sources, and the other half would be refinanced.

However, the official economic forecast for 2016, experts note, was very optimistic, and therefore plans to pay off debts by minimizing the attraction of new borrowings could not be implemented.

“Initially, economic growth was officially forecast at 0.3%, but in fact the decline in GDP is almost 3%. Budget oil revenues in 2016 also turned out to be lower than planned due to lower prices. Therefore, the opportunity to pay off debts from our own sources turned out to be less than expected,” Irina Tochitskaya comments on the situation.

According to observers, in 2017 there will be no big problems with repaying debts, since the main creditor of Belarus is Russia, which will be preparing for presidential elections next year and, for political reasons, will agree to refinance Belarus’ debt.

“Russia is entering the election campaign, and against this background, it is unlikely that Moscow will begin to put much pressure on Minsk,” suggests Valery Polkhovsky.

At the same time, he believes that there is a correlation between the growing debt burden on the Belarusian economy and the authorities’ willingness to carry out reforms, and in the medium term, not only Russia, but also the International Monetary Fund may become a creditor of Belarus.

“The growing debt burden on the economy leads to a weakening of Belarus’ position in negotiations with the IMF. Accordingly, it can be assumed that sooner or later a program with the IMF on the terms of a monetary fund may be signed, although today this is unlikely,” says Valery Polkhovsky.

Cooperation between Belarus and the IMF and steps to reform the economy may simply be forced, since today, as experts note, attracting new borrowings does not contribute to the country’s economic growth.

“A serious problem is the purpose of borrowings. If the government borrows to ensure future economic growth, this is one situation that can be welcomed. In our country, new debts are raised to pay off old ones, and this is a completely different story,” summed up Irina Tochitskaya.

The pressure on the budget caused by the debt burden will continue to increase. In 2018, Belarus must return about 8 billion rubles to creditors. Expenses for servicing the national debt are becoming more and more and this year will increase by a quarter compared to last year.

How will Belarus pay off its debts?

Belarus will have to allocate 2.54 billion rubles to service the national debt in 2018. According to the authorities' estimates, this amount will be approximately 25% more than the debt burden that the budget bore in 2017 due to the need to pay interest on previously raised borrowings.

Expenses for repaying public debt in 2018 will amount to 5.49 billion rubles. Thus, taking into account payments to repay and service the state debt, Belarus will have to return about 8 billion rubles to creditors.

Almost all of the country's debt obligations are formed in foreign currency- The authorities estimate foreign currency payments on the national debt in 2018 at $3.8 billion. By the way, the average annual dollar exchange rate, which is included in the budget for 2018, is 2.0379 rubles per dollar.

The main payments are related to debt obligations to external creditors. In 2018, payments on external government debt will amount to about $3.1 billion. Belarus must return two thirds of this money to eastern creditors.

According to information BelaPAN, This year, Belarus must pay Russia (including debt service and repayment) $1 billion 7.5 million, and the Eurasian Fund for Stabilization and Development, which is de facto managed by the Russian Ministry of Finance, $475.7 million. In addition, $563.4 million will need to be allocated to repay loans from Chinese banks.

More than a billion dollars will also have to be paid to Western creditors, including holders of Belarusian Eurobonds - $936.6 million, and the World Bank - $95.3 million. It is significant that the International Monetary Fund, which provides cheap financial resources, today is not among the creditors of Belarus.

The Ministry of Finance is now guided by a budget rule, the essence of which is that 75% of the principal debt repayment amount is refinanced, and 25% is paid from non-debt sources.

In 2018, it is planned to use proceeds from export customs duties on petroleum products ($486.5 million), part currency balances(about $1 billion) of the budget created in connection with the placement of Eurobonds in 2017.

New borrowings will also be attracted to pay off old obligations. In 2018, it is planned to issue new Eurobonds on the foreign market for $600 million, as well as new issues of bonds on the domestic market for $400 million.

In addition, in the first quarter of 2018, as the Minister of Finance reported in Parliament in December Vladimir Amarin answering questions BelaPAN, the Belarusian side expects to receive the last two tranches of the loan from the Eurasian Fund for Stabilization and Development, which is another $400 million.

Thus, in general, it is clear from what sources Belarus will pay its creditors in 2018, but it is completely unclear, experts say, when large payments Belarus' government debt will finally begin to decline.

Barrier to economic growth

As of December 1, 2017, according to the latest published data from the Ministry of Finance, the public debt of Belarus amounted to 39% of GDP.

The Ministry of Finance does not exclude that by the end of 2018 this indicator may increase to 44.5% (the Minister of Finance spoke about this in December, speaking in parliament). At the same time, the threshold value of the level of public debt in Belarus is set at 45%.

Thus, the size of Belarus’s public debt may approach the maximum value in the entire sovereign history of the country.

Experts note that the level of public debt can only decrease if economic growth accelerates. Due to GDP growth, the level of debt burden could decrease naturally. In addition, non-debt sources would appear in order to pay off old debts.

“To speed up the economy, the authorities are not trying to reform the public sector, but to create points for the development of a new, parallel economy. Recent documents (decrees on the development of entrepreneurship and digitalization of the economy) confirm attempts in this direction.", - noted the scientific director of the IPM Research Center Irina Tochitskaya.

However, the expert continued, the state has been unsuccessfully trying to create a parallel economy for many years, so there is no confidence that this will now be possible: “Fundamental prerequisites for accelerating the Belarusian economy are not yet visible”.

Foreign experts share a similar point of view. According to analysts from the Russian Sberbank, the growth of the Belarusian economy in 2018 will be 2.2%, which will be comparable to the result of last year.

“We do not see factors that could provide significant support for economic acceleration in 2018. According to our estimates, GDP growth Belarus at the end of the year will be about 2.2% and will be limited by the accumulated structural problems in the Belarusian economy", says a new review by the Center for Macroeconomic Research of the Russian Sberbank.

Experts explain their forecast by the fact that the Belarusian authorities “still have not resolved the issue of the extremely inefficient but impressively sized public sector”.

Belarusian economists believe that the country is caught in a vicious circle: low growth rates do not allow reducing the level of public debt, and a high level of debt burden is an obstacle to economic growth.

“We have been in this trap for several years now. Great pressure on the budget associated with payments on the public debt leads to underfunding of budget items (education, health care), which form the basis for long-term economic growth.", says an expert at the Belarusian Economic Research and Educational Center (BEROC) Dmitry Kruk.

The expert shares the forecasts of many foreign organizations who believe that in the next three to four years the growth of the Belarusian economy will remain low - around 2%.

In the absence of external shocks and low economic growth rates, the level of public debt can be maintained at the current level (40-45% of GDP) for a long time, the BEROC expert suggests.

“Another thing is that the light at the end of the tunnel, which would be expressed in reducing the level of public debt, is not yet visible, and any external shock (for example, devaluation Russian ruble) may further increase the debt burden on the Belarusian economy, given that the country attracts borrowings mainly in foreign currency", - summed up Dmitry Kruk.

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