The National Bank needs additional USD10 billion by 2015 to secure treasury

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April 22, 2016 18:16

The goal to replenish foreign reserves up to USD 18 billion by 2015 is rather unrealistic. The main obstacles are: the need to repay external public debt, negative trade balance (without taking into account Russian oil re-exports) and curbing privatization. The sale of Belaruskali could however solve the problem.

To fulfill the socio-economic development plans by 2015, Belarus has to replenish treasury up to USD 18 billion, which is the amount of three months imports of goods and services.

The goal is envisaged to be achieved via implementation of two tasks. First task is to reach a positive foreign trade balance, taking into account the projected amount of duty payments for exported petroleum products – USD 3.9 billion. Second task is to attract foreign direct investment worth USD 4.5 billion net. The National Bank also recons on USD 880 million from the EurAsEC Anti-Crisis Fund.

The positive trade balance in the first half of 2012 should not be misleading. Rough calculations show that Belarus could generate additional income of about USD 250 million per month using semi-legal export schemes with solvents and lubricants. If these schemes are stopped and Belarus pays all duties due for oil products supply, foreign trade balance will become negative again. Belarus can only recon on increased delivery costs of potash fertilizers. Looking at the situation in the food markets, it is possible, but potash fertilizers sales will not replace all lost income from solvents and lubricants exports.

Belarus’ major hope is to attract USD 4.5 billion from foreign direct investment and it is not a coincidence. Next year’s foreign public debt payments exceed USD4 billion and it is not feasible to repay them from the SDR 1.2 billion IMF loan, as the government fails to fulfill the IMF recommendations and continues raising salaries. Moreover, the political situation is not favourable for the IMF to take a positive decision regarding new loan progarmme for Belarus.

Belarus has never been able to attract such high amounts from investments. This is due to the fact that privatization conditions are often onerous and potential investors are regarded as sponsors. This approach significantly narrows the range of applicants seeking to buy Belarusian companies. The largest privatization deal in Belarus (sale of Beltransgaz) had two stages and lasted several years. In the meanwhile, in order to fulfill the plans with foreign reserves, Belarus needs to double the FDI amount received last year.

Theoretically, the projected level of foreign reserves could be achieved by 2015, but only if a major privatization deal takes place or a large-scale privatization starts, which is extremely unlikely.

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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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