Page 8 - BELRptNov18

2.0 Politics
2.1 Belarus finances look better after Russia offers more loans
Belarus finances looking better after Russia agrees more loans.
International ratings agency Standard & Poor’s (S&P) decided to leave Belarus rating on B/stable this week as the small republics finances have improved and new loans with Russia have been agreed.
The Belarusian economy has been struggling in recent years, as it was impacted by the Russian recession, its biggest trading partner. The republic has issued a number of Eurobonds to tide itself over, but Andrei Belkovets, head of the public debt department of the Ministry of Finance told bne IntelliNews in May the republic will not issue any more Eurobonds until 2020 and has decided to use all its excess foreign exchange earnings from exports to start paying down its outstanding debt.
Belarus is also looking for new sources of funding and has plans to issue a so-called Panda bond in China. "The process is under way," Deputy Belarusian Finance Minister Yury Seliverstov told reporters on March 28.
Minsk has also been talking to the IMF about a possible programme, however, the Belarusian leadership is so allergic to being told what to do, and IMF money always comes with lots of strings attached, a deal remains highly unlikely.
Russia remains the mainstay in the republic’s borrowing plans, which include refinancing some 75% of its debt .
The external state debt of Belarus totalled $16.6bn as of September 1, down by $173mn or 1% from early January, according to the Finance Ministry in Minsk, due to a $600mn placement of a 12-year Eurobond with a 6.2% coupon. Belarus also borrowed $614mn from Russian banks and the government.
Russia remains key to Belarus’ outlook and S&P emphasised that “the stable outlook reflects our expectation that Belarus’ external imbalances will not escalate while the fiscal stance remains comparatively tight over the next 12 months, and that the government will retain market access and support from Russia to refinance upcoming public debt redemptions”.
Relations with Russia are volatile but remain fundamentally good. Belarus Prime Minister Sergei Rumas said this month that Belarus and Russia reached an understanding on a Russian loan for Belarus in 2019. Belarus expects two tranches of a Eurasian fund loan for $400mn and a Russian government loan worth $1bn to refinance its foreign debt payments.
The country’s reserves remain under pressure due to foreign debt redemptions: foreign currency reserves fell by $320mn to $6.93bn at the end of September due to the external debt related repayments, but they are much stronger than two years ago when they dropped to a low of $4bn.
8 BELARUS Country Report November 2018 www.intellinews.com