Page 20 - BELRptAug18

Fitch expects the general government to record low deficits of 0.8% and 1.2% of GDP in 2018 and 2019, respectively, reflecting lower surpluses at the consolidated level plus potential cost related to the materialisation of guarantees, banking sector capitalisation and the asset clean-up process. We forecast the "augmented deficit", which includes off-budget programme lending - adding to government debt - to be a little higher at 1.8% of GDP in 2018.
Fitch estimates that government debt (including guarantees) rose to 55.7% of GDP at end-2017 , still below the 'B' median. Belarus's debt is highly exposed to currency volatility (90% is FC-denominated), and interest rate risk (50% floating rate). Fitch includes government guarantees, estimated at 10.1% of GDP, in its total debt calculations, due to the high likelihood that the government will need to meet state-owned enterprises' repayment obligations.
6.1.1 Budget dynamics - funding, privatization
Belarus tapped the international debt market on February 21 for the first time this year with a new $600mn issue of 12-year Eurobond with 6.2% coupon following January's drop in the nation's foreign exchange reserves by $838mn, or 11.5% month-on-month, to $6.477bn.
The Development Bank of Belarus, the nation's state-owned development agency, issued a Belarusian ruble denominated Eurobond in 2018, according to the nation's First Deputy Finance Minister Maksim Yermolovich. The agency has plans to float the Eurobonds in the country's domestic currency, the Belarusian ruble – a first – of up to BYN500mn (around $250mn).
The Finance Ministry of Belarus hopes to borrow $1bn in international capital markets annually , First Deputy Finance Minister Maksim Yermolovich said. “We will have to refinance the debt of about $1bn annually. The focused efforts to build relationships and to gain access to the international borrowing markets led to positive results. Belarus has gained a guaranteed access to the markets of Europe, the United States and Russia. China will be on this list soon. The Finance Ministry plans to achieve an annual budget surplus of $400 to $700mn in the midterm in order to repay the national debt.
In 2018, Belarus will pay about $3.8bn of debt . Maksim Yermolovich stated that much is done in the country to keep the level of the public debt below 45% of GDP. In 2017, the Finance Ministry implemented an ambitious loan program, including $1.4bn earned from floating Eurobonds, as a result, the national debt increased by $3bn, which created a reserve for the unconditional fulfillment of obligations in 2018. By the end of 2017, Belarus' foreign currency reserves amounted to $7.3bn.
6.2 Debt
Source: CEIC
Belarus - Gross external debt 2011 2012 2013 2014 2015 2016 Jan-Sep 2017
Gross external debt (USD bn) 131,628 133,602 145,982 160,653 152,642 152,327 115,518
Gross external debt (% GDP)
53.0 54.6 50.7 51.9 58.1 76.1 75.4
20 BELARUS Country Report August 2018 www.intellinews.com