Belarus takes new loans to pay off old ones

Belarus hopes to get new loans, both from the West and from the Eurasian bodies. To do this, it fosters cooperation with international institutions, Finance Minister Uladzimir Amaryn said. But will Belarus be ready to pay them.

In May, the Ministry of Finance expects to receive the sixth tranche of the Eurasian Stabilization and Development fund in the size of 200 million. By the way, since 2016 Belarus has already received one billion, six hundred million dollars as part of the loan. The Ministry of Finance also stated the need to obtain loans from the International Monetary Fund. While in the past, Alyaksandr Lukashenka personally said that Belarus does not need help from this financial institution.

“The Belarusian authorities still try to continue dialogue with the IMF, even if there will be no new loans as a result. The fact is that cooperation with the IMF, even without the money, but just at the level of consultations, surveys and getting some recommendations, is useful for the country and is important for other creditors,” said economist Leanid Frydkin.

As of March, the national debt of the country amounted to about $ 16.5 billion.

“Public debt is growing faster than the economy. Belarus paid off two billion three hundred million dollars, and borrowed almost three and a half dollars,” Lukashenka said in March.

Over the past seven years the gross domestic product of Belarus increased by only 6%, while the world GDP growth amounted to 25% — four times as much.

“With the debt service, although it is quite hard for our small foreign exchange reserves, the things are going more or less well, we regularly pay our external debt. This allows us to receive a positive assessment of creditors and rating agencies, and rely on the added external loans used to refinance debt, ” said Frydkin.

We take new loans to pay off earlier ones. It is a vicious circle that the country leadership wants to break. But noone knows how to do it.

Zmitser Mitskevich; Photo – Vasil Fyadosenka / Reuters

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