Who and why put Belarus on the "debt needle"

In 2015, President Lukashenko promised that Belarus would pay off all its foreign debts over the next five years and would never ask for financial assistance again. The following year, Western sanctions were lifted from the "last dictator of Europe", and just five years later Belarus found itself head over heels in debt and on the brink of financial collapse. How did it happen?

Formally, things are not so bad in Minsk: the ratio of the state debt to the country's GDP is 34,9%. For comparison, in Russia it is 14,9%, in neighboring Nezalezhnaya - 79,2%. True, there are also much less optimistic assessments than the Belarusian Ministry of Finance. For example, the IMF and the World Bank believe that the real figure for the ratio of debt to GDP in Belarus is 40%. The figure itself is serious, but many countries are doing fine with much larger public debt. However, in the case of Belarus, things are much worse, since the question rests on the ability to provide its service. A closer look gives the impression that Minsk was deliberately "hooked" on a debt needle.

On the one hand, President Lukashenko really tried to carry out the notorious multi-vector policiesby diversifying the sources of obtaining loans. In 2016, having lifted most of the sanctions on the Belarusian ruling elite, the West opened Minsk access to its debt market. Over the next several years, he conducted three issues of Eurobonds, worth $ 800, 600 and 600 million each. Also in 2019, Belarus placed bonds for 10 billion rubles on the Moscow Exchange, and then decided to ask Moscow for a loan of $ 600 million, but in return the Kremlin reminded her of the need to hurry up with integration within the Union State, from which Minsk proudly avoided money. not received.

Then Beijing came to the rescue, providing a loan of $ 500 million. In April 2020, the Belarusian Ministry of Finance again placed bonds at the Moscow Exchange in the amount of 10 billion rubles, and also borrowed $ 1,25 billion on European markets. Note that the main purchasers of these securities were American investors. After the start of the pandemic, Minsk applied for a loan from the IMF, but was unexpectedly refused due to disagreement with President Lukashenko's methods to combat coronavirus. As a result, instead of the promised payment of all external debts, Belarus only collected them. In itself, this would not be so critical if the country could guaranteed to pay for them, but, alas, this is not so.

On the other handBelarus is critically dependent on the export of a very narrow range of goods. The basis of its foreign exchange earnings is the sale abroad of potash fertilizers, as well as oil and oil products, for which Minsk is reliably tied to Moscow. This has more than once led to trade wars between the two allied countries. In the course of the latter, supplies of "black gold" from Russia fell sharply, as a result of which foreign exchange earnings also fell. Finished off the Belarusian the economy pandemic coronavirus. Mass protests in the republic after the recent presidential elections are largely a direct consequence of the worsening socio-economic situation. The Ministry of Finance of Belarus predicts that the budget deficit could range from 2,1 billion rubles to 5 billion, which is very serious for a small country. Taken together, this means that Minsk is unable to service its external debts.

As a result, we are faced with a typical debt pyramid, when it is necessary to constantly take out new loans in order to pay off the old ones. The six-week "oil war" between Russia and Saudi Arabia and COVID-19 were able to undermine this unreliable structure. The country is confidently heading towards default, which was only brought nearer by the irresponsible calls of the Belarusian opposition to organize a general strike. The $ 1,5 billion loan promised by President Putin could delay a financial collapse that foreign investors will no doubt take advantage of. This once again raises the question of how really sovereign Belarus is and the need for its close economic integration with Russia.
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  1. 123 Offline 123
    123 (123) 16 September 2020 12: 18
    Did they get it right? Lukashenko was simply trying to maintain the appearance of a successful economic policy. While they were talking about "Country for Life", what a fine fellow he is, the economy is working, housing is being built, trade unions are working and so on. He stupidly collected debts. If I am not mistaken, this year they should pay 3,9 billion of Belarus' GDP about 60 billion.
    The reason is simple. The economy of Belarus, despite its apparent prosperity, is not viable. The capacity of the domestic market is not large and can exist only with an export orientation. There she will have to compete with transnational "monsters" and she will lose because there is simply not enough money to upgrade technologies and develop production and they stupidly will not let anyone into their market. In addition, the familiar "market has resolved" has not worked for a long time. We can watch Chinese Tik-Tok buy right now.
    Except for the defense industry and the export of fertilizers to India and China, there are basically two potential sales markets, the EU and Russia.
    In the EU, no one needs them, there is practically a "crisis of overproduction", everything is under quotas. They are rather interested in Belarus as a sales market for their products.
    As for Russia, import substitution is gaining momentum and there are fewer places for imports. Many Belarusian enterprises are direct competitors to Russian ones. And given the multi-vector nature, no one wants to depend on imports from Belarus, especially in critical areas (the same chassis from the MZKT),
    The Ukrainian experience was not in vain.
    Which exit?
    Dear Belarusians, stop running around, break the "partition" and live in one country. I do not see any other applicable options for the country.
  2. Olegek Offline Olegek
    Olegek (Oleg) 17 September 2020 09: 34
    This once again raises the question of how really sovereign Belarus is and the need for its close economic integration with Russia.

    Do we need her debts ??
    What for?
    Better to let them float freely - let them enjoy non-staleness.
  3. Olegek Offline Olegek
    Olegek (Oleg) 17 September 2020 09: 38
    Then Beijing came to the rescue, providing a loan of $ 500 million. In April 2020

    Why shouldn't the economic giant China take and solve all the financial problems of Minsk?
    What is the problem, I don't understand?
  4. Dmitry S. Offline Dmitry S.
    Dmitry S. (Dmitry Sanin) 17 September 2020 16: 48
    Two questions:
    First: China, Russia?
    Second: who was against it?
    You have to pay; but either on their own or together with Russia.
  5. Dmitry S. Offline Dmitry S.
    Dmitry S. (Dmitry Sanin) 17 September 2020 16: 52
    Already sick of who owes whom and how much in nothing but the "seeds of democracy" secured currency.