“If it were not for the debts, of course, the economy would have been developing more rapidly. They are reasonable, but the growth would have been faster,” Lukashenka said about Belarus government debt five years ago.
In 2012, the economy grew by 1.7%. But the external debt of the public sector, including government guarantees for loans taken by commercial entities, made up a third of gross domestic product. Two years ago, the national debt was already 40% of the GDP.
To date, the public debt, including domestic debts and loans guaranteed by the state, account for half of the gross domestic product. Interest payments equal 16% of the national budget. This money is composed of investments, education, healthcare, as well as the business entites — through taxes and penalties.
Despite this, the government took additional loans every year.
This year, as of January to July period, the public debt increased by extra 7.5%. That is, to avoid a default, the country must not only to re-borrow what it owes, but also to see the debt grow every year. Recently, the World Bank representative Jan-Chul Kim warned that a scheme like that cannot last long.
Earlier this year, the Belarusian authorities ceased negotiations with the International Monetary Fund, which proposed to replace a part of expensive loans with cheap ones in order to give the country an opportunity to implement market reforms and to start reducing the debt.
On April 21 this year, Alyaksandr Lukashenka said that for him the Fund’s proposals to reform public enterprises were unacceptable.
Stanislau Ivashkevich, “Belsat”, Photo: Yekaterina Shtukina / TASS / Forum