On 9 June a loan agreement was signed with the EurAsEC for $ 3 billion with interest rate of 4.9% per year for 10 years, a grace period of repayment of principal debt is 3 years. The first tranche is expected this week.
The delayed loan decision and its allocation in tranches do not allow for its effective use for the purposes it was requested i.e. to stabilize the currency market and to delay privatization.
The first tranche of the loan will be used as a lever to obtain other loans, given the first tranche will be spent on the GCR.
The National Bank has to carry out accurate interventions at the Foreign Exchange and a part of the loan will be spent on these purposes. However there will be little effect from these interventions and the exchange rate will not stabilize.
It is obvious that the leadership understands the poor effect of the EurAsEC loan, and that is why, immediately after the information about it the authorities spread information about another USD 1 billion to come from another source. In its attempts to bring down the devaluation expectations the government spreads the most incredible rumors (as if it will come from Turkmenistan or Israel), while the only plausible source of new billion is co-owner of Uralkaliy Suleiman Kerimov.
The country's leadership has instructed the local authorities to raise minimum wages at enterprises by the end of 2019 to BYN 1,000, which would lead to an increase in the average wage in the economy as a whole to BYN 1 500. The pace of wage growth in 2017 is insufficient to ensure payroll at BYN 1000 by late 2017 without manipulating statistical indicators. In order to fulfil the president’s order, the government would have to increase budgetary expenditures on wages in healthcare and education, enterprises – to carry out further layoffs and expand the practice of taking loans to pay wages and restrict investment in modernisation of fixed assets. In 2010, the artificial increase in wages led to a threefold devaluation in 2011, an increase in the average salary to BYN 1500 will not match the capabilities of the economy and would lead to yet another devaluation.