National Bank requires additional USD 1.5 billion to repay public debt in 2015

In Q1 2015, Belarus reduced its public debt by USD 262.3 million and made due foreign currency payments. Thanks to net sales of foreign currency by the population, gold reserves did not reduce by more than USD 500 million. Taxes on petroleum products and refinancing of debt by Russia would be the main sources for making the remaining public debt payments in 2015.

The Finance Ministry has published data on public debt as of April 1^st, 2015. In Q1 2015, Belarus’ public debt reduced by USD 262.3 million and totalled USD 12.3 billion. Belarus has fully paid off the IMF Stand-by loan, made her first payments within the EurAsEC Anti-Crisis Fund loan – USD 88.3 million, and repaid debts to Chinese banks. Non-state economic sectors also have reduced their external debts, including the banking system. Non-residents have reduced their assets in the Belarusian banking system by USD 373.3 million since early 2015. Before the year-end, Belarus has to repay USD 2.7 billion of external debts.

Where did the money come from to repay Belarus’ public debt? In Q1 2015, gold reserves reduced by USD 500 million. Amid falling revenues, the population sold USD 281 million worth foreign currency. The Finance Ministry raised additional USD 88 million by placing foreign currency bonds on the domestic market. In Q 1 2015, Belarus raised USD 136 million in foreign government loans from the Russia and China.

By the year-end, Belarus may raise addition USD 800 million from export duties on oil products, which have been listed to her budget as of early 2015. In addition, the population may sell additional USD 50 million per month in the coming months (due to the holiday season), which by the year-end could sum-up to USD 400 million.

As for the remaining sum (USD 1.5 billion), Belarus hopes for refinancing from Russia – USD 700 – USD 800 million, including USD 110 million she received in late April 2015. In addition, Belarus may raise additional USD 200 million from placing additional foreign currency bonds worth about USD 500 million on the domestic market. Alternatively, Belarus may dip into her international reserves, i.e. making them critically low – less than USD 5 billion. The best case scenario is that the population continues selling foreign currency – circa USD 100 million per month.

All in all, in Q1 2015, the National Bank made all due foreign debt payments by reducing gold reserves by USD 0.5 billion only. In the best-case scenario, Belarus will continue fulfilling its international obligations with the help of Russian loans and if the population continues selling their foreign currency savings on the domestic market thus not requiring Belarus to issue Eurobonds with high interest rates.