Foreign debts refinancing is the only strategy for the Government
In 2013-2015 Belarus will has to repay USD 10 billion foreign debt. Belarus’s economic performance shows that the country will not be able to take care of the external debt burden on her own. In these circumstances, debt repayment is only possible via new external borrowing.
On September 26th, 2012 Finance Minister Kharkovets announced plans to place government bonds in foreign markets in 2013.
In 2012 Belarus was able to pay off some debt due to the successful trade during the first half of the year. Gross external debt decreased by USD 882.1 million, but simultaneously, Belarus is attracting foreign loans to fund various infrastructure projects. Over the next 3 years it will have to repay about USD 10 billion debt. Moreover, within a year Belarus will have to find a way to refinance USD 11.3 billion corporate and banking sector debt.
This week Belarus managed to agree on refinancing of Belaruskali debt vis-à-vis Russian Sberbank. The new term, 3 years, is not accidental. The authorities intentionally stretched the debt repayment over a long-term period hoping for the improvement of the economic situation in the future. Debt refinancing is natural, regardless of many statements about the possible early repay of the existing debt. Otherwise, the Ministry of Finance would have to use its gold reserves, while the loan was originally intended to replenish them.
The announced development strategy for 2013 shows there is no alternative development. EurAsEC ACF credit line and potential expansion to Asia-Pacific financial markets are need to refinance half of the USD 3 billion debt, due for pay off in 2013. Interest payments on foreign loans will mature in the expenditure budget. Bearing these numbers in mind, it is unrealistic to count on successful foreign trade, which is anticipated to replenish the gold reserves and at the same time to pay off foreign debts.
FDIs could be used to repay foreign debt, but unclear privatization programme and long sales procedures harmonization process do not contribute to maximizing profits from the state property sales.
In 2013 Belarus will be actively looking for external financing to repay the existing debt. Also the size of the needed funds (USD 500-600 million) is likely to increase.
The Labour and the Tax Ministries are considering the possibility to include persons engaged in some economic activity without forming a legal entity in the social security system. When the decree No 337 comes into effect, the number of private entrepreneurs is likely to reduce due to the possibility of reducing the tax burden when switching to a tax payment as an individual. 95% of self-employed, including PE, pay insurance premiums on the basis of the minimum wage. The number of self-employed citizens is expected to increase, the number of insurance contributions to the pension system from PE will decrease, the number of citizens who will pay a fee to finance government spending will decrease by several tens. Self-employed citizens have the alternative not to pay social security fees and save resources for future pensions, which, given the gradual restriction by the state of pension requirements could be a more long-sighted option.