Fitch forecasts general government debt to rise to 52.8% of GDP in 2020
<p> MINSK, Nov 17 - PrimePress. Fitch Ratings forecasts in a press release general government debt to rise to 52.8% of GDP in 2020. </p> <p> </p> <p> As previously reported, on November 13, Fitch revised the outlook for the long-term issuer default rating (IDR) of Belarus in foreign exchange from ‘Stable’ to ‘Negative’ and affirmed the IDR at ‘B.’ Belarus’ external public debt calculated according to the methodology of the Special Data Dissemination Standard of the International Monetary Fund amounted to $19.366 billion as of October 1, 2020. </p> <p> </p> <p> Fitch forecasts general government debt (central and local government debt including 7.9% of GDP in guarantees) to rise to 52.8% of GDP in 2020, almost 11% above 2019 levels, due to a weaker Belarusian ruble (forecast 26% depreciation against the US dollar yoy) and the economic contraction. We forecast debt to rise to 53.8% of GDP by 2022, still below the projected 71% ‘B’ median </p> <p> </p> <p> Debt dynamics are highly vulnerable to currency risk due to the large share of foreign-currency debt (91%). The risk of crystallization of additional contingent liabilities from the large SOE sector is high, given weak growth prospects and the potential for additional depreciation, Fitch says. </p> <p> </p> <p> “Belarus fulfilled most of its 2020 financing requirements before August and near-term fiscal and external financing risks are contained due to the availability of alternative sources of financing and cash buffers. The sovereign paid close to 80% of its $2.5 billion foreign currency amortizations in January-October through external market issuance, including a $1.25 billion Eurobond in June, domestic debt issuance and SOE repayments of government loans,” according to Fitch. </p> <p> </p> <p> A $500 million loan disbursement from the Eurasian Fund for Stabilization and Development (EFSD) will complete 2020 financing, while additional local issuance and $500 million loan from Russia will help pre-finance part of the 2021 $1.8 billion foreign currency debt amortization. Russia has agreed to provide an additional $500 million in 2021. </p> <p> </p> <p> “The domestic market could allow the government to refinance a higher portion of 2021 domestic debt amortizations, if required, after years of net repayments. The government holds $4.4 billion in foreign currency cash (part of international reserves) to provide short-term financing flexibility. Belarus plans to finance its consolidated budget deficit using accumulated local currency deposits (2.9% of 2020 GDP in September).” </p> <p> </p> <p> Strained diplomatic relations with Western countries will likely constrain financing from global/Western IFIs for projects and SOEs, but IFIs could continue to work with the private sector, the agency says. End </p>
2020-11-18
Primepress
MINSK, Nov 17 - PrimePress. Fitch Ratings forecasts in a press release general government debt to rise to 52.8% of GDP in 2020.
As previously reported, on November 13, Fitch revised the outlook for the long-term issuer default rating (IDR) of Belarus in foreign exchange from ‘Stable’ to ‘Negative’ and affirmed the IDR at ‘B.’ Belarus’ external public debt calculated according to the methodology of the Special Data Dissemination Standard of the International Monetary Fund amounted to $19.366 billion as of October 1, 2020.
Fitch forecasts general government debt (central and local government debt including 7.9% of GDP in guarantees) to rise to 52.8% of GDP in 2020, almost 11% above 2019 levels, due to a weaker Belarusian ruble (forecast 26% depreciation against the US dollar yoy) and the economic contraction. We forecast debt to rise to 53.8% of GDP by 2022, still below the projected 71% ‘B’ median
Debt dynamics are highly vulnerable to currency risk due to the large share of foreign-currency debt (91%). The risk of crystallization of additional contingent liabilities from the large SOE sector is high, given weak growth prospects and the potential for additional depreciation, Fitch says.
“Belarus fulfilled most of its 2020 financing requirements before August and near-term fiscal and external financing risks are contained due to the availability of alternative sources of financing and cash buffers. The sovereign paid close to 80% of its $2.5 billion foreign currency amortizations in January-October through external market issuance, including a $1.25 billion Eurobond in June, domestic debt issuance and SOE repayments of government loans,” according to Fitch.
A $500 million loan disbursement from the Eurasian Fund for Stabilization and Development (EFSD) will complete 2020 financing, while additional local issuance and $500 million loan from Russia will help pre-finance part of the 2021 $1.8 billion foreign currency debt amortization. Russia has agreed to provide an additional $500 million in 2021.
“The domestic market could allow the government to refinance a higher portion of 2021 domestic debt amortizations, if required, after years of net repayments. The government holds $4.4 billion in foreign currency cash (part of international reserves) to provide short-term financing flexibility. Belarus plans to finance its consolidated budget deficit using accumulated local currency deposits (2.9% of 2020 GDP in September).”
Strained diplomatic relations with Western countries will likely constrain financing from global/Western IFIs for projects and SOEs, but IFIs could continue to work with the private sector, the agency says. End