Belarus will obtain EDB third tranche thanks to joint efforts by Finance Ministry and National Bank
Thanks to the Finance Ministry bonds sales and net currency supply on the domestic market, Belarus’ gold reserves grew up to USD 4.7 billion. In order to obtain the third tranche from the Eurasian Development Bank, Belarus had to have at least USD 4.3 billion in the international reserves as of September 1st, 2016. Sales of the Finance Ministry bonds and restrictions on lending to the economy by the National Bank are likely to help Belarus to meet the requirements for obtaining the third and the fourth tranches from the EDB loan.
According to the National Bank, on September 1st, 2016, Belarus’ international reserves totalled USD 4.7 billion and increased by USD 82 million over the month. The gain in international reserves was due to the currency net supply on the domestic foreign exchange market at circa USD 220 million and due to the sales of the Finance Ministry bonds.
According to the USD 2 billion loan agreement with the EDB, signed in March 2016, Belarus had to preserve her international reserves at a particular level, which prompted the Government and the National Bank to implement some measures. According to the agreement, as of September 1st, 2016, Belarus’ international reserves should be at least USD 4.3 billion. Should she fail to meet this requirement, the third tranche of the loan (USD 300 million) would not be disbursed. In August 2016, the total amount of debt due by Belarus was over USD 1 billion. Without additional funds, the international reserves could drop below USD 4 billion.
In August 2016, the Finance Ministry placed four issues of currency bonds for legal persons and individuals at rates ranging from 5.5% to 5.9% per annum for a total of USD 480 million and one-year maturity period. To achieve sustainable net currency supply on the domestic market, the National Bank carried out a tight monetary policy and almost stopped issuing soft loans for housing construction for the population. The debt on bank loans to various economic sectors has not increased since early 2016. Thanks to all these measures, the international reserves have not dropped below the threshold value and Belarus is very likely to receive the third tranche from the EBD totalling USD 300 million. In addition, Belarus may as well meet the international reserves’ projected target for January 1st, 2017.
Overall, Belarus has met the challenge and preserved her international reserves higher than USD 4.3 billion. Thanks to restrictions on lending to the economy and on soft construction loans, Belarus has good chances to preserve the reserves’ growth and to meet the projected targets for January 1st, 2017.
President Lukashenka has met with the head of Chechnya Ramzan Kadyrov, who visited Minsk and the Minsk Automobile Plant. Minsk has always sought to have independent links with Russian regional elites, partially, to compensate for the Kremlin's diminishing interest in Belarus. In recent years, Belarus’ contacts with the Russian regions have been extremely intense. However, with some leaders of Russian regions, primarily heads of large republics, communication was more difficult to build. As many analysts in Minsk suggested, Minsk could regard contacts between President Lukashenka and the head of Chechnya as an additional communication channel for relieving tension in relations with the Kremlin. However, most likely, a trusting relationship with Kadyrov is a value for Minsk as such, provided Kadyrov’s broad business and political interests, and a high degree of autonomy for the Chechen leader from the Kremlin.