Authorities continue searching for currency sources
In late July Belarus plans to attract a $ 1 billion credit for the supply of potash fertilizers or for assets of Belaruskaliy, said Vice-Premier Vladimir Semashko.
Vladimir Semashko added that the inflow of foreign currency could be secured via placing public offers of shares of large domestic companies on foreign stock markets. In particular, with the “Deutsche Bank” they are investigating opportunities to place IPOs of BelAZ on foreign stock markets.
Vice-Premier Anatoly Tozik met with Vice Minister of Commerce of China Chen Jian and said that the swap agreement which was signed two years ago should be implemented with greater effort: back than Belarus and China swapped USD 3 billion of the national currencies.
The country needs an urgent influx of foreign currency. In January-May 2011 the requirements of commercial banks in foreign currency to the central bank increased from USD 531.7 million to USD 4.538 billion by 1 June. In the meanwhile the gold reserves calculated by the IMF standards went down by USD 1.438 billion in January-May and reached USD 3.593 billion, which is the lowest since 1 September 2009. The foreign currency liabilities of the National Bank to the banks exceed the volume of the international reserves by USD 944.8 million. In other words, the National Bank does not have sufficient funds for one-time payment for current liabilities to the banking sector, which casts doubt on the ability of the National Bank to discharge its liabilities in foreign currency in a timely manner.
Due to the lack of money, the country finds itself in a virtually “pre-default” state. The authorities need to find funds in the amount of approximately $ 5 billion urgently (before October). There are only two sources of revenues: new loans and privatization. The authorities work in both directions, however it is clear that the conditions put forward by the President are not satisfactory for the potential investors and creditors. Moreover, all representatives of the highest authorities (Lukashenko, Makey, Myasnikovich, Semashko and others) talk about some potential revenues and transactions in order to reduce stress and reassure investors and the population.
Accordingly, the government continues its difficult negotiations and at the same time it adopts a directive related to distribution of foreign currency earnings in the country and actively uses other administrative tools. The authorities try to tighten the monetary and fiscal policy (demands put forward by Russia and the IMF), as well as to fulfill the requirement of the IMF concerning the single exchange rate. The IMF yields for a single exchange rate as a requirement for granting a new loan, while the authorities plan to come to a single exchange rate by the end of 2011 (Br 5,000 per USD) and they need the loan to maintain the exchange rate at the level established by the National Bank.
It is obvious that this year IPOs will not be held: as a rule their preparation requires a couple of years. Possibility of a USD 1 billion loan under the condition of future privatization of Belaruskaliy or supply of fertilizers is questionable and denied by the Russian investors. Therefore, given the absence of privatization deals, investors have every reason to doubt the medium-term solvency of the country.
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.