Belarus seeks to draw new loans worth $3.5bn from Russia, EFSD – vice premier

<p> MINSK, Dec 16 - PrimePress. Belarus will turn to Russia and the Eurasian Fund for Stabilization and Development (EFSD) for new loans worth $3.5 billion in total. First Deputy Prime Minister Nikolay Snopkov made a made a statement to this effect on 16 December at conference meeting to discuss Belarus’ response to sanctions, with President Lukashenko in attendance. </p> <p>   </p> <p> A sanction against the Belarusian state debt is a sensitive issue, the official said. The sanction was introduced as part of the USA's fifth package of sanctions against Belarus. The sanction represents a direct risk to Belarus' ability to refinance the state debt, including via domestic forex borrowings. Snopkov said that Belarus will have to spend $3.3 billion in 2022 and $4.7 billion in 2023 on foreign debts, including debt servicing. The official went on saying that work is now in progress to sign a new stabilization program with the Eurasian Fund for Stabilization and Development. The Russian Federation is expected to grant a state financial loan. Belarus intends to borrow a total $3.5 billion, which will allow compensating for the loss of European funding for refinancing the state debt. </p> <p>   </p> <p> In his words, the total volume of assets kept by non-residents in Belarusian banks amounted to the equivalent of Br17 billion ($6.732bn) as of 1 December 2021. The figure has grown by Br1 billion this year. Russia's assets increased by Br950 million ($376.2m) and China's assets went up by Br200 million ($79.2m) while, as expected, assets of countries of the European Union dropped by the equivalent of Br850 million ($336.6m). </p> <p>   </p> <p> Snopkov mentioned the three main channels, through which the introduced sanctions affect the Belarusian economy: finance, merchandise export, and technology import. “As far as finance is concerned, key risks are concentrated in the ability to enable transactions of enterprises and raise foreign funding,” he explained. </p> <p>   </p> <p> Speaking about transactions, Snopkov mentioned that in January-October 2021 assets worth up to $10 million were held up in foreign correspondent banks. The sum represents 0.01% of the monthly monetary flow in foreign trade operations. “Over $200,000 has been blocked as of today. Judging by these figures, the situation is far fr om critical,” he said. </p> <p>   </p> <p> Since a majority of international financial organizations refuse to cooperate with Belarus and other options for raising investments are limited, domestic resources and internal reserves represent practically the only source of development and economic growth, said Snopkov. </p> <p>   </p> <p> Snopkov suggests that if the sanctions do not succeed, they will intensify, while predicting their direction is problematic. </p> <p>   </p> <p> As previously reported, after the August 2020 presidential election in Belarus a political crisis began. The EU, UK, US and Canada has been gradually imposing sanctions against Belarusian officials as well as individual businesses, accusing Minsk of election rigging and abuse of human rights. Western countries adopted sectoral sanctions targeting Belarus’ potash, financial, petrochemical and tobacco industries. </p> <p>   </p> <p> Russian President Vladimir Putin said on 9 Sep 2021 following negotiations with Belarusian President Alexander Lukashenko that Russia’s loans to Belarus for the period from September 2021 and until the end of 2022 will amount to about $630-640 million. Russia provided Belarus with an interstate loan of $1 billion in the equivalent of Russian roubles in 2020. The first tranche arrived in December 2020, and the second in June 2021. This loan allowed Belarus to partially repay its previous debts to Russia. In 2020, Belarus also received $500 million from the EFSD for COVID-19 response and support for vulnerable groups. The loan in the amount of $500 million was granted for 10 years in one tranche at a floating interest rate, which is defined as the average yield of Russian Eurobonds in US$ for a period of 7 years. The grace period is up to 5 years. </p> <p>   </p> <p> This is not the first loan to Belarus from the EFSD. In spring 2016, the Ministry of Finance of Belarus and the Eurasian Development Bank (EDB) signed an agreement on a $2 billion loan to Belarus in seven tranches to be provided in 2016-2018 from the Eurasian Fund for Stabilization and Development (EFSD), the main donor of which is Russia. Of this amount, Belarus received $1.8 billion because it did not meet all the conditions of the fund. </p> <p>   </p> <p> Belarus earlier received EFSD credit financing to support the 2011-2013 stand-by programme of the National Bank of Belarus and the government. The Eurasian Development Bank signed an agreement with Belarus on the allocation of a $3 billion loan in June 2011. The funds were supposed to be transferred in six tranches. Belarus never received the final sixth tranche of $440 million (due in Apr 2013) as the country failed to reach the targets of the stabilizing programme approved by the lender. </p> <p>   </p> <p> In September 2020, the EDB reported that Belarus had a credit lim it of about $1.98 billion at the EFSD and had fully used it up. End </p>

2021-12-17

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