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.
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.