EurAsEC Anti-Crisis Fund: Belarus has already budgeted future installments

The draft 2013 state budget has incorporated the receipt and use of the fifth and sixth tranches within the EurAsEC ACF loan to finance the national budget’s deficit. However, there may be certain difficulties in negotiating the tranches’ disbursement, linked to the failure to meet a set of agreed indicators.

From 15^th to 19^th October 2012, EurAsEC Anti-Crisis Fund evaluation mission will be working in Belarus.

On October 2^nd, 2012 the House of Representatives approved in the first reading the draft law “On the 2013 national budget”. The draft 2013 budget is balanced. The balanced budget lists USD 880 million in external funding from international creditors, i.e. the EurAsEC Anti-Crisis Fund. Conditions for the allocation of ACF tranches are elaborated in the Letter of Intent dated June 13, 2012.

Some indicators, essential for receiving the next tranche from the Anti-Crisis Fund, will not be implemented. The ACF considers the failure to fulfill the requirement regarding increased share in utility costs and transport tariffs coverage by the population, as non critical. Alternatively, failure to meet the volumes of state property sales is critical.

Today there are no major privatization transactions. MAZ and KAMAZ assets merger will not take place before 2013. An attempt to sell MTS shares for USD 1 billion is doomed to failure. Deterioration in the foreign exchange market and an urgent need to refinance the public debt could result in increased pressure from Russia in terms of privatization.

Belarus has no other options for external funding. 2013 socio-economic development plan leaves little hope for new cooperation programme with the IMF. Belaruskali loan refinancing agreement was made on market terms.

Russia could exploit the situation and delay negotiations on the next tranche’s allocation. In the circumstances, when yet unavailable resources have been budgeted, and their replacement is impossible on similar conditions, there may be trade-offs in terms of easing the requirements for potential buyers from Russia, willing to buy state-owned Belarusian assets.