Country’s Gold reserves continue declining

With the first $ 800 million tranche of the EurAsEC Fund received in June, Belarusian international reserve assets calculated by IMF standards as of 1 July 2011 increased by USD 557.7 million (15.5% ) in June and reached USD 4150.9 million.

However, if not taking into account these revenues international reserves declined by $ 242.3 million. In the structure of the gold reserves, reserve assets in foreign currency amounted to $ 1699.1 million, or $ 208.6 million less (10.9%) compared with the beginning of the year. At the same time in June they increased by $ 378.1 million (28.6%).

In May 2011 a positive balance of foreign trade in goods and services was recorded: USD 116.6 million. In April deficit dropped to USD 381.7 million from USD 904.7 million in March. However in the first five months of 2011 the negative balance of foreign trade in goods and services amounted to USD 2613.2 million, or increased by 42% compared with the identical period of 2010.

However in the first five months of 2011 the negative balance of foreign trade in goods and services amounted to USD 2613.2 million, or increased by 42% compared with the identical period of 2010.

“Belvnesheconombank” received from the financial market of the Russian Federation a syndicated loan of 3.5 billion Russian rubles (about $ 125 million).

Comment

Decrease of GCR could be due to the need of the National Bank of Belarus to meet its liabilities to commercial banks. Given that the liabilities to commercial banks of the National Bank of Belarus constitute over $ 4 billion, unavoidably the gold reserves of the country are doomed to decline, even if there are no interventions at the foreign currency exchange at all and foreign currency is only sold to pay for critical imports and servicing of foreign currency loans.

There is no detailed statistics which could explain changes in imports and exports in May however most likely, the surplus is due to the season when heating is not used, as well as to minimal oil purchases (Mozyr Oil Refinery was on a scheduled maintenance). Therefore by the end of the year the decrease in negative surplus will be insignificant (affected by the devaluation and crisis), and it will not ensure proper flow of currency in the foreseeable future. In this regard, the role of commercial banks is becoming crucial as they can attract syndicated loans to meet the needs of its customers in foreign currency and foreign currency earnings of the country via major crisis management projects and / or privatization.