External debt in Belarus. National debt of Belarus: refinance or default Paying foreign currency debts is becoming increasingly difficult

Even the information that is publicly available is enough to understand that everything is bad with our debts. And if the specter of default is not yet wandering around Belarus, then at least it is already approaching our borders.

The vast majority of countries have public debt. Only individual autonomous territories and distant islands in the Pacific Ocean can boast of its absence, but...

More than half of GDP

The economy of each country is unique. To compare countries with each other in terms of the amount of public debt, an indicator such as the ratio of public debt to GDP is usually used.

Based on national statistics, the public debt of Belarus at the end of 2015 amounted to 53.2% of GDP. The IMF's estimate is almost the same: 53.7% of GDP, of which 39.2% comes directly from government debt and another 14.5% from loans the government has guaranteed.

The undisputed leader here is Japan, whose public debt reached 248.1% of GDP. In second place is Greece with an indicator of 178.4% of GDP. The third position went to Lebanon – 139.1% of GDP. The sensational US national debt is 105.8% of GDP, which is 12th in the world.

It may seem that everything is fine in Belarus with the state debt, but in reality the picture is not so rosy. Much depends on the country's ability to service its obligations to creditors.

In addition, you need to take into account not only accounts payable, but also accounts receivable. For example, Japan, the world leader in terms of public debt, is one of the largest creditors of the United States. If offset occurs, Japan may be better off than in the States.

Belarus is not an active creditor of other states, but is among the active borrowers.

The most extensive concept, covering all obligations to external creditors, is public sector external debt in the expanded definition. It includes debt directly from the government, as well as debts from the National Bank, banks and enterprises with a share of state ownership of over 50%, and even loans from private companies raised under government guarantees.

The government owes the most

The external debt of the private sector, guaranteed by the state, has been exactly $0 since July of this year. But the debts of the state itself are much more impressive. As of October 1, 2016, in the structure of external debt of the public sector, 62% of the debt, or $13.9 billion, is debt directly from the government.

Another 20% of the debt, or $4.44 billion, is owed by state-owned enterprises. State-owned banks owe external creditors $3 billion, or 13% of total debt. The National Bank has the most modest appetites, whose debt amounted to $1.1 billion or 5% of the external debt.

The total volume of external debt of the public sector in the expanded definition at the end of the 3rd quarter of 2016 amounted to $22.5 billion. This is approximately $2,370 for every resident of the country or $5,110 for every working Belarusian.

Based on the fact that the average salary in Belarus at the end of October was $378, Belarusians would have to work for a whole year and another month and a half in order to earn enough to fully repay the gross external debt.

However, there is some good news. Over the past two years, the external debt of the public sector has not shown significant growth. The current $22.5 billion is about the same as it was at the beginning of the year ($22.6 billion), and even slightly less than it was at the beginning of 2015 ($23.2 billion).

Debt is being reduced thanks to the efforts of banks and businesses. Since the beginning of 2015, the National Bank has reduced its debt the most - almost by half or by 48.9%. The debt of state enterprises in less than two years decreased by 8.6%, the debt of state banks - by 1.4%. Only the government increased debts– since January 2015, the figure has increased by 6.3%.

Paying foreign currency debts is becoming increasingly difficult

The state's high interest in foreign loans is largely explained by the need to pay off old loans. Every year Belarus spends several billion dollars on servicing the foreign currency component of the national debt. For example, at the end of 2016, the amount of payments will exceed $3 billion, and in 2017 it will amount to $3.1 billion.

It is not easy for the state to find funds to pay foreign currency debts. The Belarusian economy does not generate enough foreign currency for this, and foreign investors are not in a hurry to come to us. Turning on the printing press and printing the missing amount will not work - the National Bank can only issue national currency, but we are talking about foreign currency.

The state also does not have significant savings that would help pay off debts. Volume of gold and foreign currency reserves(this is the government’s currency “stash”) now stands at $4.8 billion– 3 times less than the external debt of the state. This is very little, and further reduction of reserves cannot be allowed.

Therefore, the government is always in search of currency. Most old debts are refinanced by attracting new loans.

First chairs - then money

However, external creditors are not always ready to generously open their wallets. The fact is that in world practice, loans are often issued for a reason, but for specific purposes. For example, on reforms. The loan program clearly states the conditions that the borrower must fulfill.

In recent years, Belarus has managed to earn a reputation for violating the agreed conditions. It is for this reason that we have not yet received the last tranche of the loan from the EurAsEC, which should have arrived back in 2013. And for the same reason, negotiations with the IMF regarding a new credit program are difficult. Taught by bitter experience, the fund took the position: reforms first, and then credit.

Since the government is not yet ready for real reforms, it has to spin around. This year, good support was provided by the Eurasian Fund for Stabilization and Development, which has already allocated $800 million and will provide another $1.2 billion in the future.

However, this is also not enough: as we remember, the total volume of payments at the end of 2016 was more than $3 billion. Therefore, the Ministry of Finance had to borrow a significant amount on the domestic market. With the help of foreign currency government bonds, the government raised almost another $1.4 billion in January-October.

The specter of default is approaching the borders

Almost all other currency was purchased by the National Bank on the domestic market during exchange trading. This year, due to falling wages, Belarusians are actively selling their foreign currency “stash”. According to the results of January-November, the net sale of foreign currency by the population amounted to $1.8 billion. And if we take into account enterprises and non-residents, the “excess” of currency reached $2.25 billion.

The regulator bought this money, but there is a suspicion that this was not enough: with a foreign currency surplus in the domestic market and positive dynamics of oil and the Russian ruble, the Belarusian ruble has fallen to the basket by 13.7% since the beginning of the year. Pressure on the exchange rate is a direct consequence of the state's debt burden.

By the way, in addition to external, there is also internal public debt. Its volume as of November 1 amounted to 9.8 billion rubles. Despite the fact that domestic debt is calculated in Belarusian rubles, part of it is also formed in foreign currency - for example, through bonds that the Ministry of Finance places on the domestic market.

One can only guess what the currency component of the domestic debt actually is - the state prefers to modestly remain silent about such things. However, the information that is in the public domain is already enough to understand that everything is bad with our debts. The specter of default, if not yet wandering around Belarus, is at least approaching the borders.

23.09.2019

Country's external debt- this is the sum of all obligations of its subjects to foreign creditors.

There is a system of classification of external debt developed by international organizations depending on the elements included in its structure. According to the IMF (International Monetary Fund) methodology, it is customary to distinguish between:

• Gross external debt - consists of the total debts of government bodies, the central bank, organizations of the financial and credit system, enterprises of all forms of ownership, and individuals;
• Public debt is the amount of direct outstanding loans from the central government. Typically, these loans are aimed at covering the country's budget deficit.

With this approach to public debt The obligations of the state are separated from the obligations of the central bank, other financial and credit organizations, other enterprises and individuals. A good example of this: the debt problems of the auto giant Volvo, its actual bankruptcy and sale to a new owner from China, did not affect the credit rating and financial stability of Sweden. How appropriate this approach is for Belarus remains a matter of debate. Due to the high share of state participation in the economy, the vast majority of debts of business entities directly affect the financial position of the country.

The historical attitude towards external debt can be called more negative than positive. On the other hand, we should not forget that foreign debt, a powerful engine of economic growth, is also included in the amount of debt.

According to the Ministry of Finance of the Republic of Belarus, the following picture can be drawn of the change in the external debt of the Republic of Belarus in the current year:

*Data updated due to GDP revision

From the point of view of criteria accepted in international practice, the size of Belarus’ external debt does not exceed the established norms. External borrowings are steadily growing, but neither in absolute, nor in relative, nor in per capita terms do they look excessive. This applies to both the state debt itself and the general external debt.

Probably, the main threats to the country's economy do not lie in this area. It should be recognized that most government borrowing was not directed to industrial or commercial projects, but was used to maintain the balance of payments and restructure existing debts.

Structure of gross external debt of Belarus

The structure of the total external debt of the Republic was made up of more than half of borrowings raised since 2009. Debts from earlier periods have been almost completely repaid or converted through new loans. As of October 2015, the structure of Belarus' external debt looked like this:

• Loans from central government bodies - 33.9%;
• Borrowings - 4.6%;
• Debts - 17.3%;
• Debt of other enterprises and organizations of the Republic - 39.7%;
• Direct investments in enterprises of the Republic - 4.5%.

It is obvious that the majority of external debt is institutional debt. This includes:

• current debt of industrial enterprises for raw materials, components and energy;
• outstanding trade debt for goods supplied;
• loans taken by organizations directly from external lenders.

The external debt of enterprises of the Republic was financed from many sources and has different terms and conditions of repayment. For the most part, these debts are not autonomous, since the state is among the owners of the majority of credited enterprises. Consequently, the payment ultimately also affects public interests and public funds

The external debt of the National Bank of Belarus consists of the amount of outstanding loans (received in particular from Russian banks) and bonds sold on foreign markets. At the end of 2015, the total amount of external debt of the National Bank amounted to 1.744 billion in dollar equivalent. For comparison: the foreign currency debt of the National Bank of Belarus to other domestic banks amounted to 2.808 billion in the same period.

External borrowing may seem comparatively less problematic for creditors. As a rule, they have high liquidity, the organization of work of credit and financial institutions depends less on the form of ownership, and they themselves change owners without visible damage.

The volume of foreign direct investment in domestic enterprises remains very small. Although this is the method of raising funds that is considered the most profitable for the economic system. The first reason for this situation must be recognized as the lack of real independence among enterprises in disposing of their property and organizing their activities.

The largest external borrowings of the Republic of Belarus are loans to central government bodies. These same loans seem to be the most reliable for lenders, because It is the state that has the greatest ability to dispose of funds and property.

To understand the situation, it will be useful to consider the structure and volumes of external borrowings by the Government of the Republic of Belarus in 2015.

Was received:

• From the Russian government and banks a total of 1.572 billion in dollar equivalent;
• From Chinese banks - $528.1 million. The bulk of these loans are related, i.e. can only be used to purchase Chinese goods and finance projects with the participation of the PRC;
• World Bank loans amounting to $72.9 million. Almost all funds were allocated specifically to finance the construction of infrastructure and other facilities.

The total amount of government borrowing in 2015 was $2.173 billion.

In the same period, the Republic of Belarus repaid government loans totaling $2.016 billion. This figure is made up of:

• $1 billion to repay the first issue of domestic Eurobonds;
• $353.1 million in loan repayments from the Eurasian Fund for Stabilization and Development;
• $300 million to repay a loan from the Russian government;
• $147.7 million in repayments of Chinese bank loans;
• $115.2 million to fully repay loans to Venezuelan banks;
• $75.9 million to close the balance of the IMF loan;
• $20.9 million in current payments on World Bank loans;
• $3.6 million to pay down the U.S. Commodity Credit Corporation's grain line of credit.

It can be argued that the Republic of Belarus in 2015 and in previous periods fulfilled its debt obligations in good faith. Critical remarks have been and continue to be heard regarding the implementation by the Belarusian side of its obligations to reform the economy. Disagreements of this kind can significantly complicate obtaining new loans. However, it is precisely the concentration of property in the hands of the state that significantly facilitates timely repayment of external loans.

Based on this, the Republic can count on new international loans.

Dynamics of external public debt

In the first half of 2015, Belarus applied for a $3 billion loan to the Eurasian Fund for Stabilization and Development (formerly called the EurAsEC Anti-Crisis Fund), but received approval for only $2 billion. In March 2016, Belarus signed a program to attract a $2 billion EFSD loan, which is provided in seven tranches over 2016-2018. However, in order to receive a loan, the Belarusian authorities must implement a set of measures to reform the economy. ​ The EFRS transferred 2 tranches in 2016 in the amount of $500 million in March and $300 million in July. Belarus planned to receive the third tranche of the Eurasian loan in October 2016, but this did not happen.

The external public debt of Belarus as of January 1, 2016 amounted to $12.4 billion and decreased by 1.1% in 2015.

The limit on Belarus' external public debt in 2016 was approved in the amount of $17 billion.

In 2016, the external public debt of Belarus increased by $1 billion 198.8 million to $13.6 billion, taking into account exchange rate differences. Thus, the country’s external public debt increased by 9.6% over the year..

In January-December 2016, Belarus attracted external government loans in the amount of $1,934.9 million:

Since the beginning of 2016, repayment of external public debt amounted to $892.4 million:

In January-December 2017, external government loans were attracted in the amount of $4,040.7 million:

Repayment of external public debt since the beginning of 2017 amounted to $1,029.4 million:

In 2018, external government loans were attracted in the amount of $2,353.8 million:

Repayment of external public debt in 2018 amounted to $1,997.3 million:

In January-July 2019, external government loans were attracted in the amount of $559.8 million:

Repayment of external public debt in January-July 2019 amounted to $1029.4 million:

External debt in Belarus in 2019

It is still impossible to speak with certainty about the prospects for external lending to the Republic this year. It is known that some preliminary work is being carried out to obtain a loan from. Belarus is discussing with the IMF the possibility of implementing a cooperation program designed for 3 years, with a loan of $3 billion at 2.28% per annum for a period of 10 years. The International Monetary Fund is calling on Belarus to implement a comprehensive strategy of economic reforms for state-owned enterprises to improve efficiency and productivity and reduce fiscal risks. The IMF is also recommended to identify and take consistent measures to achieve full cost recovery in the housing and communal services sector. This can probably explain the sharp rise in prices for utilities and the general tightening of budget policy at the end of 2015 - beginning of 2017.

As of November 1, the public debt of Belarus amounted to 41.9 billion rubles, and compared to the beginning of the year it increased by 4.9 billion, the Ministry of Finance said. The country has the most external debts: we currently owe $16.6 billion to foreign countries and partners. Moreover, taking into account exchange rate differences, the increase over the year was quite large - $2.9 billion.

At the same time, the domestic government debt as of November 1 amounted to 9.2 billion rubles. It should be noted that over the year it decreased by 1 billion.

The debt is very large, and not only external, but also internal. We decided to ask the experts: is this the limit? Do we still have somewhere to get money? Or is it already time to tighten our belts and make do with what we have?

You can take as much as you like. Our debt does not take up such a large percentage of GDP, except that external debt is somewhere around 40%. But there are countries where this figure is equal to 200% of GDP,” Zhanna Kulakova, a financial consultant at TeletradeBel, told KP. “But it is very important to consider the country’s ability to service its debts. It is already obvious that Belarus does not have its own funds to service such foreign currency debt. Why did the national debt of Belarus begin to grow at such a rapid pace? Because we have to pay 3-4 billion dollars a year, and our economy does not generate such funds. So we have to take on new debts to pay off the old ones, explains Zhanna Kulakova. - What resources does the country have? For example, export. Theoretically, we should receive foreign exchange earnings from everything we export. But there is also import. And our imports and exports are approximately equal. And by and large, foreign trade does not bring us foreign exchange earnings. There are export duties, which are also credited in foreign currency. But this is a small amount. For example, for 2017, the budget planned about $500-600 million in export duties. Another source is the National Bank, which buys up surplus currency donated by the population. Last year, 2 billion dollars were bought from the population, foreigners and enterprises, this year in January-October - about 1.3 billion dollars. That is, at the end of the year it will clearly be less than in 2016.

These are all the foreign exchange sources that the government has at its disposal. And we have to pay almost 4 billion dollars. Obviously there is not enough money. So you have to get into new debts.

- Are there really no other options other than refinancing old debts?

Eat. We need to increase foreign trade so that exports bring in revenue. It is necessary to attract foreign investment so that people with foreign currency come to Belarus and develop business. But it's not that simple. You can’t just write a decree and sign it. We need to seriously work on the business climate, the general economic situation, and the country’s image abroad. This is a long and thorny path. And for now there is nothing else left to do but take out new loans and send them to repay the old ones. I think this approach will continue in the near future.

AND AT THIS TIME

The euro has updated its annual maximum

On Friday, December 1, at the National Bank exchange rate, the US dollar was equal to 2.0123 rubles. This was the US currency's annual high since the beginning of 2017. True, the dollar is still far from reaching its historical maximum (2.2069 rubles), which was on February 11, 2016. By the way, after Friday trading on the stock exchange, the dollar fell slightly in price. Thus, the official exchange rate of the American currency for the weekend and Monday was set at 2.0114 rubles.

At the last trading session this week, the euro reached a new annual maximum of 2.3974 rubles. Let us recall that the historical maximum of 2.4956 rubles for the European currency was on February 13, 2016.

But the Russian ruble on Friday was worth the most in its entire history. The currency exchange rate of the neighboring country was 3.4356 Belarusian rubles per 100 Russian rubles. But in the last exchange trading of the week, the Russian ruble fell in price. The official exchange rate for today is as follows: for 100 Russian rubles - 3.4351 Belarusian.

At the end of the first half of 2017, the national debt of Belarus reached its maximum level in the quarter century of the republic’s independence. Its size amounted to 40.4% of GDP. At the same time, the government is attracting new borrowed funds from abroad. The President of the European Bank for Reconstruction and Development, Sir Suma Chakrabarti, is visiting Minsk until September 14. The parties are expected to discuss the terms of the new loans. The financial authorities of Belarus remain calm. There are several reasons for optimism: this is the growth of gold and foreign exchange reserves, and encouraging volumes of exports of goods abroad. How can the state pay off its debts without shocks?

Symbolic visit

From September 12 to 14, the President of the European Bank for Reconstruction and Development (EBRD), Sir Suma Chakrabarti, is visiting Minsk. The bank, commenting on his arrival, noted that Belarus in recent years has “demonstrated greater international openness and greater willingness to discuss domestic political events, including the human rights situation in the country.” These changes allowed the EBRD to adopt a new country strategy - that is, to become more actively involved in Belarusian public sector projects, including state and municipal infrastructure and pre-privatization support for state-owned enterprises.

Previously, the European Bank did not finance the Belarusian public sector due to excessive (from the point of view of an international organization) state intervention in the economy and human rights violations. The bank cooperated only with private companies.

In Minsk, Sir Suma Chakrabarti has already met with high-ranking officials, and negotiations are ahead with President Alexander Lukashenko and Prime Minister Andrei Kobyakov. Also, the head of the EBRD will sign a number of documents, including an agreement with Belinvestbank on the provision of a subordinated loan.

The most noteworthy thing about this visit is the mention of new loans from the EBRD. The fact is that just a few days ago - on September 5 - the Council of Ministers of Belarus approved an agreement with the Russian government on the provision of another state financial loan. The corresponding agreement was signed on August 30 in Moscow.

At the end of August, the Russian Cabinet of Ministers approved the allocation of a $700 million loan to Belarus to refinance previous borrowings. That is, so that official Minsk can pay off old debts to Moscow. A preliminary agreement on this was reached during negotiations between Vladimir Putin and Alexander Lukashenko in St. Petersburg on April 3, 2017.

But this Russian loan “to repay old debts” turned out to be only one of many taken out by the Belarusian authorities this year. The unusually high growth rate of external debt is causing concern among economists of all kinds - both those in opposition and those who support the government's policies.

Debts set records

At the end of the first half of the year, Belarus' public debt relative to GDP reached a historical maximum.

As of July 1, the amount of external and internal public debt, according to the Ministry of Finance, amounted to 40.4% of GDP. This is the maximum value for all 25 years of Belarusian sovereignty.

To understand where this record came from, you need to delve a little deeper into history. Until 1996, Belarus borrowed money from both European countries and Russia, but in relatively small amounts. Although our own economy in the first half of the 1990s was small, so those borrowings looked considerable.

However, in 1996, in honor of the creation of the Union State of Russia and Belarus, Boris Yeltsin wrote off all debts to the fraternal state. After this, for ten years everything was fine: Minsk received energy resources at a preferential price, the Russian market was open to Belarusian enterprises, and the economy could grow without external borrowing. According to the Belarusian Ministry of Finance, as of January 1, 2007, external and internal public debt amounted to 6.5% in relation to the country's GDP.

Everything began to change in 2007, when, after the process of union integration was stopped in Moscow, energy prices for Belarus were revised. It was then, wanting to maintain high rates of economic growth and stability of the exchange rate of the Belarusian ruble, that official Minsk began to actively attract loans.

In the period from 2007 to 2011, the debt burden on the economy increased significantly: if at the beginning of 2007, external and internal public debt in relation to GDP was 6.5%, then at the beginning of 2012 it was 27%.

External public debt during this period increased more than 20 times: from less than $600 million at the beginning of 2007 to more than $12 billion at the beginning of 2012.

“Interest and loan payments placed a heavy burden on the Belarusian economy, which was no longer growing at the same rate. Since 2013, Belarus’ annual payments on external and internal public debt have exceeded $3 billion, Belarusian political scientist Anton Platov told RT. - It was no longer possible to lend money at the same rate; many lenders stopped working with Minsk for political reasons, for example, the IMF. We had to urgently make friends with China - Beijing issued loans, although only “tied” ones (when the money itself remains in Beijing, and the Belarusian authorities can spend it on the purchase of Chinese goods), but without regard to such things as human rights.”

In 2015 and 2016, there was a noticeable devaluation of the Belarusian ruble, due to which the country’s economy “shrank” in dollar terms, and the government debt, denominated mainly in foreign currency, increased noticeably in relation to GDP. If at the beginning of 2015, internal and external public debt in relation to GDP was 22.3%, then at the beginning of 2016 it was already 31.5%, and at the beginning of 2017 - 39.4%.

At the beginning of this year, Belarus partially paid off foreign loans, but received new tranches from Russia and the Eurasian Fund for Stabilization and Development (EFSD), and in June it placed Eurobonds for $1.9 billion.

As a result, external public debt rose to a record $15.6 billion, and the level of public debt in relation to GDP reached its highest level in the entire history of the country - 40.4%.

“An interesting point: no one can say that Belarus owes so much, that is, name one figure. Because debts can be calculated using a variety of methods, explained Anton Platov. - For example, often agreements on loans are reached by heads of countries or governments, but they are formalized as loans from one bank to another. Plus bank guarantees for transactions - how to take them into account? Plus loans taken abroad by Belarusian state-owned enterprises, for which the state guaranteed. There are many nuances here, and the numbers, accordingly, turn out different.”

How to pay

Back in 2015, the leadership of Belarus was concerned about reducing the level of debt burden on the economy. Then the government approved the Public Debt Management Strategy for 2015-2020, which assumed that at least half of the external debt would be repaid from internal resources, and the second half would be refinanced (that is, paid through new loans).

The plan was good because it involved a gradual reduction in the level of debt. However, the oil and gas contradictions between Minsk and Moscow, which lasted for almost a year (from the spring of 2016 to the spring of 2017), undermined the revenues of the Belarusian budget, and the republic again had to go into debt. As a result, the amount of public debt, both in monetary terms and in relation to GDP, continues to grow.

Currently, 10% of the republican budget expenditures are spent on servicing the national debt alone. As a result, the state is forced to significantly limit social spending in order to pay off accumulated debt obligations.

The debt burden on the Belarusian economy can be reduced when efficiently operating enterprises can ensure sufficient rates of economic growth. But this requires reforms in the real sector - the same ones for which the Belarusian government has already taken money from both the IMF and the EFSD.

Another option, directly related to the previous one, is to reduce the fiscal burden on the economy. But the Belarusian president has so far postponed the decision on tax cuts and, in general, significant stimulation of business activity in the country until October.

The authorities remain calm

While some of the country's media are sounding the alarm due to record levels of external debt, representatives of the Belarusian government are demonstrating calm. Thus, recently, speaking on the Belarus 1 TV channel, First Deputy Minister of Economy Dmitry Krutoy said that in 2018 the republic will maintain gold and foreign exchange reserves at a level of at least $6 billion and does not plan new external borrowings.

The amount of external payments (interest on loans) is more than $3 billion, and they are planned to be serviced “at the expense of the economy.” As for new loans, in 2018 the government is counting only on what has already been planned - these are two tranches from the Eurasian Fund for Stabilization and Development.

At the same time, the situation with the state “stash” is quite stable.

According to the National Bank, international reserve assets (gold and foreign exchange reserves, gold and foreign currency reserves) of Belarus as of September 1, 2017 amounted to $6.994 billion in equivalent, having increased in August by $328.8 million, or 4.9%. This is the maximum volume of gold and foreign exchange reserves since October 2013. In January-August, the increase in reserves amounted to $2,066.4 million, or 42%.

The increase in international reserve assets was facilitated by revenues to the budget from export duties on oil and petroleum products, an increase in the volume of funds in foreign currency in banks' correspondent accounts with the National Bank, an increase in the cost of monetary gold, the receipt of funds from the sale of foreign currency bonds, as well as the purchase of foreign currency by the National Bank at stock exchange trading. At the same time, the government and the National Bank in August fulfilled external and internal obligations in foreign currency amounting to about $135 million.

Another reason for the optimism of the Belarusian authorities is good export figures. In January-July 2017, Belarusian exports of goods and services increased by 19.5% compared to the same period in 2016 - to $19.739 billion. The balance of trade in goods and services for the first half of the year increased significantly, amounting to $489 million compared to $73.9 million in January -July last year, reports the National Bank.

Exports of goods over seven months increased by 20.8% - to $15.608 billion, the balance of trade in services in January-July - $1.630 billion. The indicator for the same period last year was exceeded by 37.7%.

The increase in the first half of the year was ensured by the long-term driver of Belarusian exports (last year it fell noticeably, but is now recovering) - potash fertilizers. Also, supplies abroad of Belarusian butter, cheese, cottage cheese and a number of other traditional products for the republic have increased significantly.

Stay up to date with current events.

The government of Belarus has raised the national debt ceiling, but it is ready to overcome it too

The size of the national debt of Belarus has reached another maximum and, taking into account the peak repayment load, may increase in the current and next years. Refinancing is problematic, and without it there is nothing to service the national debt.

The dynamics of the national debt of Belarus over the past 10 years, calculated according to the IMF methodology and including the debt of the central government and the debt guaranteed by the central government (guarantees for external and internal financing attracted by Belarusian entities), demonstrates a growth that threatens economic security. Konstantin Smyslov analyzed the phenomenon in the Belarusian Economic Newspaper and came to exactly this conclusion.

In 2008, the external public debt of Belarus amounted to 5.2% of GDP and was less than the internal one (6.3% of GDP), and the total public debt did not reach 12% of GDP (the volume of GDP in USD equivalent according to the World Bank). However, already in 2009, the external public debt of the Republic of Belarus overtook the internal one, and its sharp growth continued until 2012.

During 2012-2016, the growth of external public debt slowed down significantly. Domestic in 2012-2013 increased due to the conversion of external debt into internal debt - to pay external debts, our government collected foreign currency from Belarusian entities, and at the same time a period of aggressive foreign currency lending to state-owned enterprises under government guarantees began. Then the debt burden on GDP stabilized at 30%, and external debt at 20%.

In 2015, another devaluation was carried out, which hit the currency equivalent of GDP, as a result of which the share of public debt jumped to 40%, the indicator of external debt increased to 28%. At the beginning of 2017, the burden on GDP reached 48%, and by the end of that year it had dropped to 46%. At the same time, the growth of external debt continued - it reached 34% of GDP, while internal debt decreased.

The national debt of Belarus in the national definition (without government guarantees) as of July 1, 2018 amounted to 42 billion BYN (21 billion USD) and decreased by 0.5% since the beginning of the year - to 36.7% of GDP: external public debt amounted to 16 .4 billion USD to 28.6% of GDP, and domestic public debt amounted to 9.3 billion BYN (4.6 billion USD - up to 8.1% of GDP.

As of January 1, 2018, government-guaranteed debt amounted to BYN 7.8 billion or 7.2% of GDP, including external - 3.9% of GDP and internal - 3.3% of GDP. According to IMF criteria, as of January 1, 2018, it reached 15% of the national debt.

In the first half of 2018, Belarus attracted external government loans in the amount of USD 1.2 billion, using USD 1.4 billion to repay external government debt. The main sources of external debt were Eurobonds, the government and banks of Russia, banks of China and the EFSD, less significant - the EBRD, IBRD and NIB and the USA.

“Belarus has adopted an economically safe external debt threshold of 45% of GDP. Of this, 25% of GDP is external public debt, 20% of GDP is internal. Payments for servicing the state debt should be within 10% of the republican budget revenues. Taking into account the guaranteed debt, this threshold was exceeded as of 01/01/2018. For external debt, the norm has been “calmly” exceeded for a long time,” Smyslov stated.

At the same time, he noted: “However, in Belarus, internal measures to contain external debt are more stringent than those laid down in the Maastricht Agreement for eurozone countries (60% of GDP). What is not surprising is that our developing economy requires more resources to move up.”

Belarusian Law No. 86-Z dated December 31, 2017 “On the Republican Budget for 2018” determines the maximum levels of public debt and guaranteed public debt: external - 19.6 billion USD, internal - 10 billion BYN, internal guaranteed - 3.1 billion. BYN, external guaranteed - 3 billion USD.

“Before the end of the year, the country needs to pay creditors 3.8 billion USD (principal debt - 2.5 billion, interest - 1.3 billion), - Smyslov noted. - The most significant expenses are for loans from the government and banks of Russia (USD 1.0 billion), Eurobonds (USD 0.9 billion), loans from Chinese banks (USD 0.6 billion) and the EFSD (USD 0.5 billion) . Payments to other creditors will amount to only 0.1 million USD.”

The same last year’s law determined the direction of oil export duties (in 2018, 0.5 billion USD are expected) exclusively for repaying the state debt. For the same purpose in 2018, budget revenues in the amount of 1.3 billion USD and a reserve formed from borrowings in 2017 to repay Eurobonds will be used - 0.8 billion USD, as well as other sources in the amount of 1.2 billion USD (tranche of the EFSD loan - 0.2 billion USD, funds from the placement of domestic government bonds - 0.4 billion USD and external - 0.6 billion USD).

“Thus, Belarus’s ability to service external debt is under strain, while the prospects for increasing the volume of attracting financing are still favorable (improving sovereign ratings, macroeconomic stabilization),” the Belarusian analyst noted.

“At the same time, the possibilities for internal refinancing of external debt (the most “painless” way out for Belarus, because old bond issues can be converted into new ones, thereby delaying the repayment of the principal debt) turn out to be limited - both by the budget and the desire of subjects to purchase foreign currency government bonds - for this there is no state guarantee of return of funds (as for deposits), and demand begins with a higher return than the state is ready to offer. That is why practically no issue of foreign currency government bonds is placed immediately and in full; as a rule, this happens 2-3 times before the final placement,” he explained.

Let us recall that according to Fitch Ratings, the public debt of Belarus, including guarantees in the amount of 9.5% of GDP, reached 52.5% of GDP at the end of 2017 and today also exceeds half of GDP - despite the fact that the Ministry of Finance of Belarus has determined the threshold value of public debt at 45% of GDP.

The agency stated: “The indicators of net external debt (46% of GDP) and external debt servicing (16% of current payments in foreign currency) are still significantly higher than those of issuers with comparable ratings.”

“Belarus' debt is highly susceptible to exchange rate volatility (90% of the debt is denominated in foreign currency). Fitch includes government guarantees in the calculation of total debt due to the high likelihood that the government will be required to repay SOEs' obligations. Weaker macroeconomic indicators and exchange rate volatility could create fiscal risks for public finances due to the significant presence of state-owned enterprises in the economy. The significant presence of the public sector (65% of assets) in the financial sector creates fiscal risks for the sovereign issuer due to the potential need for further capital contributions, the execution of guarantees and the issuance of securities in exchange for the transfer of loans,” the agency experts explained.