The credit outlook of Belarus revised to stable from negative
The outlook revision implies S&P’s saw the signs of economic stabilization and improvement of short-term financial conditions in Belarus. In addition, the agency affirmed the short-term rating on Belarus at “C”.
“Foreign currency reserves have strengthened, immediate pressure on the exchange rate has eased, and inflation, although still very high, is decreasing,” S&P said in a statement. However, the ratings on Belarus are constrained by political risks, high government financing needs, reliance on external funding, and the government’s reluctance to introduce much-needed structural reforms to improve the country’s competitiveness and growth prospects.
Belarusian authorities immediately reacted to the improved ratings, announcing plans to accumulate the external debt by the end of the year, inter alia, by issuing Eurobonds – hoping for improved conditions for the Belarusian state securities in the international market. First Deputy Finance Minister, V. Amarin said Eurobonds could be issued “at the end of this year or early next year”. Belarusian authorities consider conditions favourable if return rate is under 10% per year. Mr. Amarin added there were also proposals to refinance the national debt. “We have received these proposals and we are considering them, but refinancing bids fair to be expensive”, he said. Therefore, the government indirectly recognized the existence of external debt repayment challenge and openly declared about searching for ways to refinance the debt.
Belarus’ GDP in the first quarter of 2012 increased by 3% and amounted to Br 105.6 trillion (about $ 13 billion). The projected annual GDP growth is 5-5.5%. Industrial output during this period increased by 8.3%, up to Br 153.6 trillion (about $ 19 billion), with projected annual growth of 6-7%. Investment in fixed assets has decreased by 15.1% to Br 23.5 trillion (about $ 2.9 billion). In March consumer prices increased by 1.5% and by 5% since the beginning of the year.
The Belarusian authorities could to step up the opposition representation in local councils, should party members demonstrate potency. The Belarusian leadership is unlikely to have the resources to ensure 100 percent pro-government candidates in the local elections. The authorities have exhausted the grassroot support and have no funds to pay for the loyalty.
The Belarusian Central Election Commission has proposed to hold the elections to the local Councils of Deputies on February 18th, 2018.
The president has repeatedly emphasised the importance of the local councils in the power system and the state machine always tried to ensure the necessary local election results. Candidates have been decreasing in number with each elections and the authorities dealt with that by reducing the deputy corps. That said, during the rule of President Lukashenka, his electoral base has changed substantially. Over the past decade, most Belarusians have moved to cities and lost their local roots. The rural population is ready to support the president, but rural residents are constantly decreasing in number.
The Belarusian leadership is likely to permit broad participation in the election campaign and an increase in alternative representatives in the local councils. However, the opposition would have to boost its activity, so as so far it has been passive in defending its interests. In addition, the authorities, while determining the date for the local elections, have taken into account the fact that the opposition is usually the least active in the winter time.
Overall, both, the opposition and the local authorities have exhausted their grassroot support, however new local leaders may still come on political stage, although the party opposition has not yet shown sufficient aspirations.