The national debt of Belarus is rapidly approaching the red mark. On December 1st, it stood at 39% of GDP. However, the boundary set by the government is 45%.
The considerable growth of these figures has two causes
“Firstly, it is a direct increase in external debt, and secondly — a rapid decline in GDP in dollar terms,” explains the analyst Vadim Iossub.
Experts associate the growth of external debt with the reduction of subsidies on the part of Russia. While in 2006 their volume amounted to about a quarter of our economy, now it is only about 5% of the Belarusian GDP.
“Russia is deliberately reducing the bidget subsidies that Minsk does not need to return, replacing them with loans that Minsk will be forced to return sooner or later. And since it will not be able to do it, in return, Russia would prepare the political and economic bill,” said the Economic Observer of Belsat Stanislau Ivashkevich.
Who and how much do we owe?
This year, we are to pay Russia the most — nearly $ 1 billion, taking into account fees and loan for servicing. Extra $ 1 billion will go to the owners of Belarusian eurobonds. Chinese lenders and the Eurasia Foundation for Stabilization and Development are also expecting big sums.
To pay off the old debts, the government plans to take new ones.
Instead of bread and butter, less money will go to the social sphere. This year, the public expenditure on education and health care together should be only 900 million BYN.
“Payments on foreign debt are expected to amount to 3 billion BYN. It means that the interest on the debt will actually eat three annual general budgets on health and education,” adds Ivashkevich.
How to break the vicious circle?
A significant growth of the economy, which in turn requires thorough economic reforms may help, mainly in the public sector, which also lives on credit.
“We need radical solutions to the problem of inefficient state enterprises and debts that have accumulated within the economy. Radical decisions are not made by the government either on the first or the second issue, so debt and its ratio to GDP will, unfortunately, grow,” predicts Vadim Iossub.
According to the most pessimistic forecasts of experts, this year the ratio of debt to GDP could exceed the permissible 45% — the boundary that determines our economic security.
Olga Żarnasiek, Belsat
