Page 25 - BELRptApr19

6.1.2 Budget dynamics - funding, privatization
Russian President Vladimir Putin has greenlighted the allocation of a new $600mn government loan to Belarus , the nation's Finance Minister Anton Siluanov told reporters on April 2. Minsk would use the money to repay previous Russian loans. The two governments are discussing procedures needed for signing the loan agreement, Siluanov added. The minister also underlined that the Russia-led Eurasian Fund for Stabilisation and Development (EFSD) is considering the allocation of the seventh $200mn tranche to Minsk. In October 2018, the EFSD allocated the sixth $200mn support tranche to cash-strapped Belarus from the lender's $2bn loan agreed with Minsk in 2016. The allocation of the tranche followed reports that Moscow intends to suspend the allocation of new tranches from $2bn support package agreed between Minsk and the EFSD, as well as suspend negotiations on a new $1bn intergovernmental loan, which could be a painful blow for the reserves. Meanwhile, Belarus faces a new economic crisis if Minsk fails to secure full compensation from Russia for losses triggered by the latter’s new energy taxation system (the so-called tax manoeuvre), the International Monetary Fund (IMF) said in a statement in January.
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 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.
Belarus is in top 10 destination for the European Bank for Reconstruction and Development (EBRD) in terms of the amount of investment , EBRD President Suma Chakrabarti told reporters following his meeting with Belarus President Alexander Lukashenko on 4 March. Since the EBRD began working in Belarus in 1992, the bank has invested over €2.4bn in 115 projects in various branches of the national economy. In 2018, the EBRD conducted approximately 2/3 of its operations in the private sector, the rest in the public sector. The Bank is set to stick to this ratio in the next five years prioritizing the development of the private sector. For example, in 2018 the EBRD earmarked the largest municipal loan of €84mn to Minskvodokanal, €5mn to the solid waste management company in Pukhovichi District and Cherven District of Minsk Oblast and also €42mn to complete the Minsk Ring Road 2 renovation project. The Bank signed loan agreements with a number of foreign and domestic companies in the private sector. The Bank allocated €50mn to the manufacturer of particleboard and furniture company IOOO VMG Industry, €20mn to the furniture manufacturer IOOO Mebelain, €20mn to OOO Evrotorg. In 2018, the EBRD bought a stake in the agricultural group Servolux and also issued a €5mn loan to the pharmaceutical company Apteka Group. The EBRD supported the development of renewable energy in the country,
25 BELARUS Country Report April 2019 www.intellinews.com