Bail out requested from Russia will not cover Belarus needs during elections year

April 22, 2016 19:07

In 2015, Belarus has to repay a sizable amount of her public debt; she therefore has requested a loan from Russia. A USD 2.5 billion Russian loan will be insufficient to cover Belarus’ outstanding debt and enable her to ensure financial stability in the election year; meanwhile, Russia currently cannot afford issuing a larger loan for her ally.

In 2015, Belarus’ public debt repayment obligations will constitute circa USD 4 billion. In December 2014, the National Bank managed to raise an additional USD 1 billion loan with repayment due in 2015. As of February 1st, Belarus’ international reserves totalled USD 4.7 billion. Over the past six months, the reserves have reduced by USD 1.5 billion, which indicates that Belarus will be unable to service her public debt without raising additional funds. The ongoing international markets’ situation is not favourable for placing Belarus’ Eurobonds issues and the domestic market simply does not have the required amount.

Belarus has found a partial solution for this problem – she will place a new issue of governmental bonds on the Moscow Stock Exchange to be redeemed by the Russian National Wealth Fund. In 2014, a similar scheme involved Russian VTB Bank, which provided a short-term bridge loan, which was later repaid from the intergovernmental loan. In addition, Belarus might still receive the sixth tranche of the EurAsEC Anti-Crisis Fund totalling USD 440 million.

In 2015, Belarus will keep the export duties on oil products in her budget. Initially, such proceeds were estimated at circa USD 1.5 billion. That said, the potential USD 2.5 billion loan from Russia could solve the problem with servicing public debt in 2015. However, the sharp fall in oil prices in late 2014 – early 2015 might substantially reduce the volume of Belarus’ proceeds from export duties on oil products. 

The devaluation of the Belarusian rouble was inadequate to change the international trade situation. International trade deficit will remain regardless of the restrictive import measures. In addition, the situation on the Russian market has not improved for Belarusian goods, excluding any sales growth potential.

The situation on the domestic foreign exchange is challenging too. In January 2015, the population, fearing for their currency deposits withdrew more than USD 150 million from the banking system. 

All in all, Belarus requires circa USD 4-5 billion in order to service her international and domestic debts. It is a substantial amount for Russia and she may not consider allocating it on terms acceptable for Belarus.

When the Belarusian authorities requested a bail out from Russia, they have recognised their inability to service the public debt in 2015 independently. The requested amount is not sufficient to address all economic misbalances, however, due to the difficult financial situation Russia will not allocate a larger amount on terms acceptable for Belarus.

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The Belarusian authorities have launched a discussion on the moratorium or abolition of the death penalty under the pressure of Belarusian human rights activists and international community. Apparently, the authorities are interested in monitoring public sentiments and response to the possible abolition of the capital punishment. The introduction of a moratorium on the death penalty would depend on the dynamics in Belarusian-European relations, efforts of the civil society organisations and Western capitals.

In Grodno last week, the possibility of abolishing the death penalty in Belarus or introducing a moratorium was discussed.

The Belarusian authorities are likely to continue to support the death penalty in Belarus. During his rule, President Lukashenka pardoned only one person, and courts sentenced to death more than 400 people since the early 1990s. Over the past year, Belarusian courts sentenced to death several persons and one person was executed.

There are no recent independent polls about people’s attitude about the death penalty in Belarus. Apparently, this issue is not a priority for the population. In many ways, public opinion about the abolition of the death penalty would depend on the tone of the state-owned media reports.

That said, the Belarusian Orthodox Church and the Roman-Catholic Church stand for the abolition of the capital punishment, however their efforts in this regard only limit to public statements about their stance. Simultaneously, the authorities could have influenced public opinion about the death penalty through a focused media campaign in the state media. As they did, for example, with the nuclear power plant construction in Astravets. Initially unpopular project of the NPP construction was broadly promoted in the state media, and eventually, according to independent pollsters, was accepted by most population.