Gold reserves will maintain at USD 8 billion if there is stable inflow of international loans
Despite the negative external payments balance, including the duty payments on oil products, the National Bank managed to maintain the international reserves around USD 8 billion. This was facilitated by external loans of the banking system and a certain safety margin gained in the early 2012. To continue maintaining the gold reserves at this level would be difficult without external loans.
On January 25th, the National Bank published data on receipts and payments for goods and services in 2012.
In December 2012, Belarus had to repay USD 315 million debt. She also repaid other internal and external obligations. In December the international payments deficit, including oil products duties, was USD554 million. Amid substantial net foreign exchange expenditures, the gold reserves reduced by only USD 112.6 million. The difference had been covered by the banking loans and by the National Bank’s foreign assets which were not included in the gold reserves.
In December, the banking system has reduced the net foreign assets by USD 531.1 million. The main reason was to attract loans from non-residents. The National Bank has reduced its net assets by USD 568.5 million. Not all National Bank’s assets are part of the gold reserves. According to the National Bank, foreign currency deposits are not included in reserve assets, in December they have reduced by USD 296.3 million. These assets have been accumulated in Q1 and Q2 of 2012 and reached a maximum of USD 2.1 billion. This safety margin allowed the National Bank to fulfil its internal and external obligations after the solvent schemes halted and foreign trade in goods and services deteriorated.
In January, USD 400 million debt payment is due. External trade deficit will not allow paying off this international debt from own sources. The EurAsEC Anti-Crisis Fund loan tranche has not been received due to technical reasons. The new issue of bonds for individuals by the Finance Ministry is minor and will not save the unfolding situation. Either the National Bank or commercial banks need new loan intakes.
In January, the National Bank may use the remaining reserves which are not included in the reserve assets, to maintain the gold reserves’ level. However, the safety factor is low. Since the situation with foreign trade will not improve significantly, new financial inflows are needed. So far, the banking system has been successful in attracting foreign loans, but it is impossible to count on this factor only: even if they wanted, the banks would not be able to ensure a constant inflow of USD 500-600 million. Repayment of international debts requires international loans inflow otherwise the National Bank would have to dip into the gold reserves, which is undesirable.
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.