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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.
The European Bank for Reconstruction and Development (EBRD) is extending its first-ever local currency loans in Belarus by providing credit lines to local lenders Minsk Transit Bank (MTBank) and Belarusky Narodny Bank (BNB-Bank) for on-lending to small and medium-sized enterprises (SMEs) across the country. MTBank and BNB-Bank will each receive credit lines of up to $10mn in BYN equivalent, the EBRD said in a statement on August 30. "In a country where the population is just under 10mn people, the SME sector plays a very important role," the statement reads. "There are over 112,000 local SMEs in Belarus, which are responsible for almost a quarter of the country’s GDP and employ around 1.5mn people. They also contribute to 42% of the country’s external trade." The EBRD believes that the support and development of SMEs has been identified as one of the key priorities by the government of Belarus and the multinational lender, which is offering both financial and knowledge transfer assistance to local small businesses. The project with MTBank and BNB-Bank will help limit FX-related risks for borrowers with local currency revenues and will offer loans with longer maturities to clients in Belarus. Both banks will also be able to further develop their SME lending portfolios. It is expected that other banks in Belarus will join the EBRD local currency lending initiative in near future. The EBRD has invested over €2bn in 95 projects in various sectors of the economy of Belarus.
26 BELARUS Country Report September 2018 www.intellinews.com