The Anti-Crisis Funds tranche came just in time

On April 30^th, the National Bank announced the immediate availability of the next tranche of the EurAsEC Anti-Crisis Fund at Belarus’ Finance Ministry accounts.

Belarus’ failure to comply with a number of the loan terms did not hamper the funds’ transfer. The tranche was received on the last day of April, enabling to demonstrate the international reserves’ growth on May 1^st, 2013. To maintain the international reserves at USD 8 billion Belarus needs additional loans, due to continuation of the negative trends in the foreign trade in 2013.

The allocation of the 5^th tranche anticipated certain problems for the Belarusian government. In a letter of intent to the EurAsEC Anti-Crisis Fund, Belarus assumed an obligation to sell state property worth USD 2.5 billion by late 2012. The fifth tranche was transferred on April 30^th regardless of Belarus’ failure to comply with this clause, which while not being mandatory, reflects Russia’s greatest interest. One possible reason for the timely transfer could be a series of agreements on military cooperation, which is a sensitive issue for Russia.

In April 2013 gold prices dropped – price of gold per troy ounce in the international markets fell by USD 129.25 per 1 ounce, which devalued Belarus’ gold reserves by USD 175-180 million. In addition, in April the National Bank paid USD 280 million on external public debt. Taking into account the potential foreign currency net supply from individuals, the international reserves could reduce to the NBB indicative value USD 8 billion. Availability of USD 440 million and its inclusion in the gold reserves as of April 30^th, will enable to demonstrate the reserves’ growth, compared with April 1^st, 2013.

Belarus can get the last tranche of the Anti-Crisis Fund not earlier than November 2013. Foreign trade balance is negative and the upwards trend is not observed. Monthly international public debt payments make at least USD 200 million. Stable and lasting net foreign currency supply from individuals should not be anticipated due to lower interest rates on ruble deposits. Domestic market borrowings are feasible, but their volume is not sufficient to maintain the national gold reserves at the desired level. Belarus needs new loans to support the economy amid certain crisis in the global economy.

Thus, Belarus once again found a way to convince Russia to allocate the necessary funds, allowing Belarus to show economic stability in Q1 and Q2 2013. But the country needs to find new credit sources, because there are no foreseeable incomes in the next six months, and she will hardly manage to maintain the international reserves at USD 8 billion without additional revenues.