Citizens and businesses’ currency savings as a source of debt refinancing
2013 will mark the beginning of substantial external debt repayment period for Belarus. Interest rates on foreign currency deposits in the domestic market are lower than the foreign loans rates. A new savings strategy could avoid the need for external borrowing.
On October 4th, 2012 Finance Minister Kharkovets spoke about the possibility to place foreign currency bonds in the domestic market.
In 2013 Belarus will have pay off USD 2.9 billion. It is unlikely that the IMF loan will be refinanced, bearing in mind Belarus’ commitment to high GDP growth, which contradicts the IMF recommendations. In addition, cooperation on a new credit programme is halted by political factors.
Belarus agreed to refinance the Belaruskali loan at 8.5% for a three-year period. This rate is much higher than the rates prevailing in the domestic deposit market. In August the average rate on new short-term deposits in foreign currency for the population was 5.8% per annum and 3.6% for legal persons.
The government has reiterated its desire to raise population’s funds in the country’s economy several times. However, the increase in deductions on funds in foreign currency up to 12% would result in a further rates’ reduction and the currency outflow from the banking system.
Given the circumstances, the state could issue foreign currency bonds in the domestic market. In spring 2012, with 9% annual rate, there was a high demand for banks’ foreign currency bonds. New issues were bought out in short terms.
There are some technical difficulties with issuing bonds for private persons. However, the state could issue foreign currency bonds and simultaneously announce amnesty of capital, which has been planned. The state could consider amnesty of capital, which was invested in state-currency bonds with a lower interest rate than in the foreign loans market. These funds could be put in the turnover in Belarus and the public debt servicing cost could be reduced.
Therefore the Finance Ministry can assist the creation of a new investment instrument, to reduce the debt servicing cost and bring additional resources in the economy.
The Belarusian authorities regard the Catholic conference as yet another international event to promote Minsk as a global negotiating platform. Minsk’s proposal to organise a meeting between the Roman-Catholic Church and the Russian Orthodox Church is rather an image-making undertaking than a serious intention. However, the authorities could somewhat extend the opportunities for the Roman-Catholic Church in Belarus due to developing contacts with the Catholic world.
Minsk is attempting to lay out a mosaic from various international religious, political and sportive events to shape a positive image of Belarus for promoting the Helsinki 2.0 idea.
Belarus’ invitation to the head of the Holy See for a meeting with the Patriarch of the Russian Orthodox Church should be regarded as a continuation of her foreign policy efforts in shaping Minsk’s peacekeeping image and enhancing Belarus’ international weight. The Belarusian authorities are aware that their initiative is unlikely to find supporters among the leadership of the Russian Orthodox Church in Moscow. In Russia, isolationist sentiments prevail.
In addition, for domestic audiences, the authorities make up for the lack of tangible economic growth with demonstrations of growth in Minsk’s authority at international level through providing a platform for religious, sportive and other dialogues.