National Bank manages to maintain reserves at USD 8 billion

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April 22, 2016 18:32

According to preliminary data, on June 1st, 2013 foreign exchange reserves were USD 8,041 million.

In May, the foreign exchange market experienced the shift from net supply to net demand for foreign currency by individuals and businesses. Until autumn, no guaranteed inflows of foreign currency are anticipated. The National Bank needs to ensure foreign currency inflow in order maintain the reserves at USD 8 billion.

In May foreign currency market situation shifted from net supply to net currency demand by individuals and businesses. The net currency demand on the domestic market was USD 138.5 million. Traditionally, during the summer period currency demand by individuals is increasing due to summer holiday season. An additional negative trend for the National Bank will be the transfer from ruble deposits to currency deposits due to lower discount (23.5% per annum) and the subsequent reduction of the ruble deposits yield for individuals. Businesses will increase pressure on the foreign exchange market due to the foreign trade situation worsening and the growing negative foreign trade in goods.

Belarus received the fifth tranche from Russia. The sixth tranche issue will be considered in the autumn. Russia’s ambassador to Belarus said that Russia will not provide funds for the modernization of Belarusian enterprises. Joint Russo-Belarusian projects, which could be funded by Russian loans, are stalled. The Finance Ministry has abandoned plans to place bonds on foreign markets for the summer period.

Potential placement of bonds on the domestic market will not be enough to meet the foreign currency demand. The only possible sources to cover the National Bank’s currency needs to service international and domestic debts would be loans from international banks to Belarusian banks.

The National Bank needs at least USD 800 million to repay the country’s public debt in the summer. The National Bank has some resources, which are not calculated in the reserves. If the foreign exchange market will manage to keep the foreign currency demand at low volumes, the National Bank will have enough financial resources to maintain the reserves at their current level without significant external borrowings. However, it is more likely that the currency demand will exceed the National Bank’s capabilities. The National Bank either has to find circa USD 300 million, or come to terms with the need to reduce the reserves from USD 8 billion, which is undesirable.

Thus, the favourable foreign currency market situation, which allowed the National Bank to buy foreign currency, is over. The National Bank needs to ensure additional foreign currency inflow in order maintain the reserves at USD 8 billion.

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Belarusian and Ukrainian Defence Ministries entangle in confrontation spiral
October 02, 2017 11:57
Фото: RFRM

Over the past year, military-political relations between Minsk and Kyiv have become complicated. Due to their high inertia and peculiarities, this downward trend would be extremely difficult to overcome.

The root cause of the crisis is the absence of a common political agenda in the Belarusian-Ukrainian relations. Minsk is looking for a market for Belarusian exports in Ukraine and offers its services as a negotiation platform for the settlement of the Russo-Ukrainian war, thereby hoping to avoid political issues in the dialogue with Kiev. Meanwhile, Ukraine is hoping for political support from Minsk in the confrontation with Moscow. In addition, Ukraine’s integration with NATO presupposes her common position with the Alliance in relation to Belarus. The NATO leadership regards the Belarusian Armed Forces as an integral part of the Russian military machine in the western strategic front (the Baltic states and Poland). In addition, the ongoing military reform in Ukraine envisages a reduction in the number of generals and the domestic political struggle makes some Ukrainian top military leaders targets in politically motivated attacks.

Hence, the criticism of Belarus coming from Ukrainian military leadership is dictated primarily by internal and external political considerations, as well as by the need to protect the interests of generals, and only then by facts.

For instance, initially, the Ukrainian military leadership made statements about 100,000 Russian servicemen allegedly taking part in the Russo-Belarusian military drill West-2017. Then the exercises were labelled quazi-open and military observers from Ukraine refused to provide their assessment, which caused a negative reaction in Minsk. Further, without citing specific facts, it was stated that Russia was building up its military presence in Belarus.

Apparently, the Belarusian and Ukrainian Defence Ministries have entangled in a confrontational spiral (on the level of rhetoric). Moreover, only a small part of the overly hidden process has been disclosed. That said, third states are very likely to take advantage of the situation (or have already done so). This is not only about Russia.

The Belarusian Defence Ministry officials are restrained in assessing their Ukrainian counterparts. However, such a restraint is not enough. Current military-political relations between Belarus and Ukraine are unlikely to stabilise without the intervention of both presidents.

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