In 2011 Belarus’ foreign debt increased sharply
The country’s economic policies are based on borrowings and sales of state property. If external debt rate continues to grow, the means to attract new loans will reduce along with the value of property put up for privatization.
The only option for recovery is to attract FDI for new businesses and projects however any significant improvement of business climate under the current political and economic conditions is impossible.
Belarus’ foreign debt in 2011 increased by 3.9 times and on 1 January 2012 amounted to Br 111.9 trillion. Domestic debt increased by 3.5 times and reached Br 32.3 trillion. The external public debt - GDP ratio in 2011 increased up to 40.8% from 17.1% on January 1, 2011. The total public debt of Belarus – GDP ratio in 2011 reached 52.5%. The external debt secured by the central government had the highest growth rate in 2011, i.e. it increased by 8.1 times, up to Br 13.4 trillion.
Such a significant increase in external debt in 2011 was due mainly to the devaluation of the Belarusian ruble, and the corresponding decrease of the GDP of the country. Calculated in USD, the external public debt of Belarus in 2011 increased by 1.38 times and reached USD 13.4 billion on January 1, 2012. Regardless of the fact that currently the external public debt ratio is still below the level recommended by the World Bank (50%), the irreversible trend of growth of debt is disturbing and threatening. With the increasingly aging capital stock and technologies, the only way for the authorities to stimulate the economy is to pump it up with emission money and as a result, face with the devaluation, slowed-down GDP growth and a sharp decline in the living standards. Bearing in mind the upcoming parliamentary elections, a sharp reduction of budget expenditures and tightening of the tariff policy for the population are merely feasible. Therefore, the country is doomed to a vicious circle of fallacious economic policy and increasing domestic and external debts. In 2012-2014 the government should repay more than USD 6 billion of debts, which is impossible without major new borrowings. That makes the country’s position vulnerable in the long run.
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.