Belarusian authorities have found resources to replenish the gold reserves and for potential investments at the currency and stock exchange

JSC Sberbank of Russia will provide “Belaruskali” with USD 1 billion loan without requiring a pledge of shares. This money will be used as collateral for possible interventions to maintain the market exchange rate in the future at a level acceptable for the authorities.

The JSC Sberbank of Russia will provide “Belaruskali” with USD 1 billion loan without demanding stake as security, announced Deputy Prime Minister of Belarus Sergei Rumas on 12 September. According to the government’s news agency BelTA, Mr. Rumas stressed that the Belarusian potash company would not have to put up any shares as security for the loan. In the meanwhile, Russian Sberbank does not confirm this information, arguing that the negotiations are ongoing.

“We are planning a mission to go to Minsk next month for further discussions with the authorities to update ourselves on the economic situation in Belarus, and to give them some further advice,” Mr. Jarvis said.

The International Monetary Fund (IMF) plans to send a new mission to Minsk on 5-17 October, Chris Jarvis, Head of the IMF mission to Belarus, said on 13 September during a conference call with reporters in Washington. “We are planning a mission to go to Minsk next month for further discussions with the authorities to update ourselves on the economic situation in Belarus, and to give them some further advice,” Mr. Jarvis said. He said there could be no new stand-by programme for Belarus without “strong and demonstrated commitments” to economic reform by the Belarusian government, namely,liberalization of the exchange rates, liberalization of prices, tightening of the fiscal policy, inter alia, concerning wages.

Deputy Chairman of the National Bank of Belarus Taras Nadolny has not excluded that Belarus may revoke its application for a new IMF loan and will cope with the financial and economic crisis on its own.

Comment

Regardless of the denial by the authorities of the fact of interventions during the additional session of the BSCE, they may well decide to do so in the future. Interventions are secured by the Russian Sberbank loan (the Deutsche Bank with its USD 1 billion and a demand to secure loan with stake has withdrawn its offer, which increases risks and the loan’s interest rate) and by the proceeds from the sale of “Beltransgaz” in the near future. It is possible that the Sberbank feels confident about Belarus and is not afraid of risks of failure to repay the loan.

It is possible that the Sberbank feels confident about Belarus and is not afraid of risks of failure to repay the loan.

However, in general, it is hard to share the optimism of the authorities, given the depth of the currency crisis in the past 6 months (1+2.5+0.4 does not add up to 5 billion). Furthermore, even if the NBB finds the money to maintain the exchange rate this year, without the IMF loan and / or large-scale privatization repayments of the previous IMF and other loans would not be feasible.