Domestic market borrowing potential is not exhausted yet
On April 25th, First Deputy Finance Minister Vladimir Amarin announced the Ministry’s plans to involve USD 300-400 million from the domestic foreign exchange market in 2013.
Belarus has successfully coped with international debt payments. The international trade situation raises concerns due to growing negative trade in goods balance, which may require additional monetary resources. Due to the instability in the international financial markets, borrowing in the domestic market remains the real source of low-cost international debt refinancing.
In Q1 2013 Belarus paid off USD 330 million of international public debt. It had no impact on the gold reserves volume because in January 2013 Belarus received USD 440 million from the EurAsEC Anti-Crisis Fund. The domestic foreign exchange market situation is characterized by net currency supply, both from legal and natural persons, enabling the National Bank to buy certain volumes of currency supply and pay off international debt without reducing the international reserves’ standard.
According to preliminary data, international trade in goods balance and international services in Q1 2013 were positive at USD 279.4 million. This amount does not include export duties on oil products – Belarus has listed more than USD 1 billion to the Russian budget. Due to further growth of Belarus’ international debt and potential deterioration in foreign trade, Belarus will need further borrowings for the timely repayment of her international liabilities. The domestic currency market situation may change soon, and the National Bank will not be able to buy foreign currency in the domestic foreign exchange market. The EurAsEC ACF fifth tranche, to be allocated by late April, will create the necessary reserve for payments in Q2 2013, but will not be sufficient to make all payments due in 2013.
Due to unfavourable international financial market situation, Belarus’ Eurobonds placement has been postponed. The Finance Ministry relies on domestic market borrowings. Two debut issues of state foreign currency bonds for individuals, worth USD 50 million were sold off, the third issue, worth USD 50 million with a two-year maturity period is nearing its completion.
On April 24th, one of the Belarusian banks bought government’s foreign currency bonds worth USD 75 million at 6.9% per annum for a 4 year-period. On April 25th, Belarus held the first auction for foreign currency bonds at pre-announced 7.25% interest rate per annum for 3 years. The demand exceeded supply by half.
In addition, two largest state-owned banks, Belarusbank and Belagroprombank, issued foreign currency bonds for individuals on similar in terms as government bonds, but with shorter maturity period - one and a half years at 7% per annum. Bonds sales are successful, which means the domestic foreign exchange market has bigger borrowing potential.
Thus, both natural and legal persons can provide the state with their own available resources at acceptable rates. There is certain potential for bigger borrowings and the state sees no difference where the money for refinancing of the public debt comes from. The next logical step would be the appearance of the secondary market for the state currency bonds for individuals.
President Lukashenka continues to rotate staff and rejuvenate heads of departments and universities following new appointments in regional administrations. Apparently, new Information Minister Karliukevich could somewhat relax the state policy towards the independent media and introduce technological solutions for retaining control over Belarus’ information space. New rectors could strengthen the trend for soft Belarusization in the regions and tighten the disciplinary and ideological control over the student movement in the capital.
President Lukashenka has appointed new ministers of culture and information, the new rector of the Belarusian State University and heads of three universities, assistants in the Minsk and Vitebsk regions.
The new Information Minister Karliukevich is likely to avoid controversial initiatives similar to those former Minister Ananich was famous for, however, certainly within his capacities. Nevertheless, the appointment of Belarusian-speaking writer Karliukevich could be regarded as the state’s cautious attempt to relax environment in the media field and ensure the sovereignty of national media.
The Belarusian leadership has consolidated the trend for mild Belarusization by appointing a young historian and a ‘reasonable nationalist’, Duk as the rector at the Kuleshov State University in Mogilev. Meanwhile, while choosing the head of the Belarusian State University, the president apparently had in mind the strengthening of the ideological loyalty among the teaching staff and students at the main university in order to keep the youth movement at bay. Previously, Korol was the rector of the Kupala State University in Grodno, where he held purges among the disloyal teaching staff.
The trend for the renewal of mid-ranking executives and their rejuvenation has confirmed. The age of the Culture Minister and three new rectors varies from 39 to 44 years old.