Belarus close to full absence of foreign financing

Western banks almost shut down limits of open financing of Belarusian banks after the Belarusian authorities applied the International Monetary Fund for a loan.

Interfax reports it with a reference to a source in a Belarusian bank.

“After western banks, which continued cooperating with Belarus, learnt Belarus had applied the International Monetary Fund for a loan, that they took an immediate decision on cutting unsecured limits of the Belarusian banks,” the source said.

He added that western banks shut their unsecured limits on most Belarusian banks in September current year due to the liquidity crisis. A number of foreign banks continued work in September–October on unsecured ground only with two biggest Belarusian state-owned banks – Belarusbank and Belagroprombank, the AFN notes.

After Belarus asked the IMF for aid, the western banks shut down unsecured limits of these Belarusian banks, the source said. He thinks that the western partners adopted this decision in fear of increased risks of their business. The risks have increased due to Belarus’s request for an IMF’s loan, demonstrating instability in financial sphere, the expert explained actions of the western banks.

“90 per cent of banks that continued to work with us on unsecured basis closed limits after Belarus’s application for a loan. It means that after the current projects are financed, and facilities, issued in the frames of limits, are returned, the banks, closed limits, will suspend their business with Belarusian banks,” he said.

In his view, in the current situation Belarus is “close to full absence of foreign financing”.

“Conditions of attracting any foreign financing have complicated, and western banks are ready to give only pledged resources that are secured by facilities of clients or own capital,” the banker said. “As a rule, big banks don’t carry out pledge transactions. So, it is senseless for us to attract facilities on a secured basis.”

The representative of the bank said the Belarusian banks had the only source of crediting resources in this situation - local clients attracting funds.

Speaking about prospects of renewal of unsecured crediting, the source noted that “western banks links this possibility with a decision of the IMF: if the Fund open financing, banks will renew limits, but if the IMF doesn’t give a loan, western banks will find risks have increased, and so, we can’t expect recovery of unsecured limits.”