Sanctions against Russia may mean Belarus struggles to refinance public debt
Belarus’ international trade policy does not enable her to pay her own debts. In 2014 Belarus was able to repay her public debt manly thanks to the loans from Russia. Sanctions imposed on Russia and her private and state banks may complicate the refinancing process of Belarus’ old debts and receiving new loans from Russia.
On July 1st, 2014 Belarus’ public debt totalled USD 13.4 billion.
The level of economic cooperation between Belarus and the rest of the world does not enable her to repay previous loans. In January-June 2014, the deficit in foreign trade balance persisted. Belarus paid over USD 1.7 billion to Russia in export duties on Russian oil, and net investment proceeds were consistently negative. As a result, her corporate and public debts rose steadily. Belarus’ international public debt alone increased by USD 921.5 million.
In January-June 2014, Belarus repaid USD 1.507 billion without significantly depleting her international reserves. This was only possible due to a USD 2 billion bridge loan from Russia’s VTB Bank – to be followed by an interstate loan from the Russian government later this year.
Meanwhile, sanctions imposed by the U.S. and the E.U. on Russian banks directly affect Belarus’ ability to refinance outstanding international public debt payments.
Russia’s VTB Bank is included on the list of sectoral sanctions, which means that the bank will have difficulties in drawing on European markets and might be unable to provide new loans to Belarus. Russian banks on the sectoral sanctions’ list will require substantial support from the Russia’s Central Bank.
In addition, banks with Russian capital will be less active in buying bonds from the Belarusian Finance Ministry. The sectoral sanctions may lead to a reduction in lending in the Russian economy and reduce GDP growth, which may require additional budgetary support and make loans to Belarus infeasible.
To date, Belarus has only been able to meet her public debt obligations without dipping into international reserves only thanks to financial aid from Russia. Sanctions imposed on some Russian banks may have a direct impact on Belarus’ ability to refinance her public debt. She will also be prompted to diversify her sources of borrowing.
President Lukashenka continues to rotate staff and rejuvenate heads of departments and universities following new appointments in regional administrations. Apparently, new Information Minister Karliukevich could somewhat relax the state policy towards the independent media and introduce technological solutions for retaining control over Belarus’ information space. New rectors could strengthen the trend for soft Belarusization in the regions and tighten the disciplinary and ideological control over the student movement in the capital.
President Lukashenka has appointed new ministers of culture and information, the new rector of the Belarusian State University and heads of three universities, assistants in the Minsk and Vitebsk regions.
The new Information Minister Karliukevich is likely to avoid controversial initiatives similar to those former Minister Ananich was famous for, however, certainly within his capacities. Nevertheless, the appointment of Belarusian-speaking writer Karliukevich could be regarded as the state’s cautious attempt to relax environment in the media field and ensure the sovereignty of national media.
The Belarusian leadership has consolidated the trend for mild Belarusization by appointing a young historian and a ‘reasonable nationalist’, Duk as the rector at the Kuleshov State University in Mogilev. Meanwhile, while choosing the head of the Belarusian State University, the president apparently had in mind the strengthening of the ideological loyalty among the teaching staff and students at the main university in order to keep the youth movement at bay. Previously, Korol was the rector of the Kupala State University in Grodno, where he held purges among the disloyal teaching staff.
The trend for the renewal of mid-ranking executives and their rejuvenation has confirmed. The age of the Culture Minister and three new rectors varies from 39 to 44 years old.