Foreign exchange reserves still critically low

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April 22, 2016 18:01

Regardless of the following transfer of the EurAsEC loan in the near future and two more in 2012, the actual volume of foreign exchange reserves is far from the safe level.

The NBB assesses the deficit balance of payments at $ 1.4 billion and as a consequence, foreign exchange reserves in 2012 could amount to USD 6.1 billion. However two transfers within the Anti-Crisis Fund of theEurAsEC loan agreement of total USD 880 million will increase the foreign exchange reserves up to $ 7 billion. The National Bank believes this amount will close the gap in foreign deficit in 2012.

Regardless of authorities’ statements about the increased foreign exchange reserves, their real value is still far from being safe. For instance, one of the criteria of minimal sufficiency of ForEx reserves that ensures the economic security of the country is that it amounts to 3 months of imports, namely, about $ 12 billion by the end of 2012. It implies that the foreign exchange reserves should be increased by USD 4.6 billion however there are no options at the moment that would secure such an increase. Moreover the volume of foreign exchange reserves of $ 7 billion should be treated carefully, as almost half of it constitute various loans from commercial banks, ergo 1) this money is not ‘real’, 2) loans need to be repaid in the following 10-15 years.

Apart from the projected trade surplus in 2012 of USD 1.3-1.5 billion (which is not yet a fact), USD 3.7 billion is still needed to pay for the customs duties on petroleum products to Russia. In addition, substantial funds (approximately USD 5 billion) will be spent on the repayment and servicing of the external debt (USD 1.2 billion of interest on total external debt, USD 3 billion to pay off the principal debt, and USD 460 million of liabilities of the National Bank).

Therefore, in 2012-2013 the need for external financing will remain and will not reduce. Moreover, the repayment amounts will almost double. Nevertheless, the authorities are not considering the possibility of a stabilization loan from the IMF, which, apart from its financial implications, carries a meesage to investros (including investment banks) that the country has embarked on reforms and it can be dealt with.

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Belarusian and Ukrainian Defence Ministries entangle in confrontation spiral
October 02, 2017 11:57
Фото: RFRM

Over the past year, military-political relations between Minsk and Kyiv have become complicated. Due to their high inertia and peculiarities, this downward trend would be extremely difficult to overcome.

The root cause of the crisis is the absence of a common political agenda in the Belarusian-Ukrainian relations. Minsk is looking for a market for Belarusian exports in Ukraine and offers its services as a negotiation platform for the settlement of the Russo-Ukrainian war, thereby hoping to avoid political issues in the dialogue with Kiev. Meanwhile, Ukraine is hoping for political support from Minsk in the confrontation with Moscow. In addition, Ukraine’s integration with NATO presupposes her common position with the Alliance in relation to Belarus. The NATO leadership regards the Belarusian Armed Forces as an integral part of the Russian military machine in the western strategic front (the Baltic states and Poland). In addition, the ongoing military reform in Ukraine envisages a reduction in the number of generals and the domestic political struggle makes some Ukrainian top military leaders targets in politically motivated attacks.

Hence, the criticism of Belarus coming from Ukrainian military leadership is dictated primarily by internal and external political considerations, as well as by the need to protect the interests of generals, and only then by facts.

For instance, initially, the Ukrainian military leadership made statements about 100,000 Russian servicemen allegedly taking part in the Russo-Belarusian military drill West-2017. Then the exercises were labelled quazi-open and military observers from Ukraine refused to provide their assessment, which caused a negative reaction in Minsk. Further, without citing specific facts, it was stated that Russia was building up its military presence in Belarus.

Apparently, the Belarusian and Ukrainian Defence Ministries have entangled in a confrontational spiral (on the level of rhetoric). Moreover, only a small part of the overly hidden process has been disclosed. That said, third states are very likely to take advantage of the situation (or have already done so). This is not only about Russia.

The Belarusian Defence Ministry officials are restrained in assessing their Ukrainian counterparts. However, such a restraint is not enough. Current military-political relations between Belarus and Ukraine are unlikely to stabilise without the intervention of both presidents.