New Devaluation Is Possible, Expert Says

Gold and foreign currency reserves of Belarus can run dry soon.

Surplus of the Belarusian budget is enough to service and pay about a quarter the debt, and three quarters of the debt must be refinanced, or borrow again.

As of January 1, 2017 the national debt of Belarus equals to 37 billion rubles and increased by 4.1 billion or 12.5% as compared to the beginning of 2016, the Ministry of Finance informs.

As of January 1, 2017 the external debt amounted to $13.6 billion increased by $1 198.8 million (adjusted for exchange rate differences) or 9.6% since the beginning of the year.

In January-December 2016 external government loans totaling to $1934.9 million were attracted, and the repayment of external debt has equaled to $892.4 million since the beginning of 2016.

As of January 1, 2017 the domestic debt amounted to 10.2 billion rubles increased by o.5 billion rubles (adjusted for exchange rate differences) or 5% since the beginning of the year.

As of January 1, 2015 the external debt equaled to $12.6 billion increased by $139.34 million or 1.1% since the beginning of 2014.

As of January 1, 2016 the government debt of Belarus made 328.6 trillion rubles and increased by 131.1 trillion rubles or 66.4% as compared to the beginning of 2015,

Senior analyst of Alpari Vadzim Iasub in an interview to BDG noted that the state's ability to service and repay debt was of great importance for the economy.

- There is no clear critical indicator for the government debt. The ability of the state to service the debt is essential. The government debt does not pose any problems, if the economy grows. The economic growth promotes the necessary budget surplus to service and repay the debt. The economy of Belarus has been recently falling and surplus of the Belarusian budget is enough to service and pay about a quarter the debt, and three quarters of the debt must be refinanced, or there is a need to borrow again. The situation cannot be described as critical, yet it is unable to refinance the government debt at the expense of external and internal loans. The situation is completely operating.

But in case of shock due to the fact that it is not possible to take new loans for some reasons, for example, the authorities do not agree to a loan with the IMF, and subsequent tranches of the loan of the EEU are frozen, then the foreign debt will have to be covered at the expense of gold and foreign reserves. It will make gold and foreign reserves run dry within a few years.

The size of the debt and its ratio to GDP is not critical unlike the ability or inability to refinance it.

- What problems may the debt cause when absence of external financing?

- Drastic reduction in gold reserve leads to sharp increase in devaluation expectations and real devaluation. As a result, ruble equivalent of the monetary debt grows again that impairs the ability to service it.