BELARUS NEWS AND ANALYSIS
DATE:
16/03/2011
Belarus Seeks $3 Billion in Loans From Russia, Partners
By Ilya Arkhipov and Agnes Lovasz
Belarus asked Russia and its other former Soviet partners for loans totaling $3 billion to meet the country’s financing needs as its foreign-currency reserves declined.
The country requested a $1 billion loan from Russia and a $2 billion loan from the anti-crisis fund set up by the Eurasian Economic Community, a grouping of post-Soviet nations, Russian Finance Minister Alexei Kudrin said today in Minsk, following a meeting with Belarus Prime Minister Mikhail Myasnikovich and Kazakhstan Prime Minister Karim Massimov.
The request follows Standard & Poor’s decision yesterday to lower Belarus’s debt rating, citing increased “external vulnerability,” as the nation’s currency reserves are being depleted. A $3.5 billion loan provided by the International Monetary Fund in 2009 during the global financial crisis has already expired.
Belarus “has only petty cash left in dollar reserves,” Barbara Nestor, an emerging-market analyst at Commerzbank AG in London, wrote in an e-mailed note today. Belarus “seems to be pressed for time to strike a deal with Russia.”
Any loan from its larger neighbor will come with IMF-style conditions, such as speeding up an economic overhaul and state asset sales, according to Nestor.
Russian Prime Minister Vladimir Putin also offered Belarus a subsidy of $4.3 billion this year. Putin also said Russia will sign a $6 billion nuclear-plant construction credit with Belarus.
IMF Demands
The Washington-based IMF urged policy makers in Belarus on March 9 to curb spending, raise interest rates and allow the Belarusian ruble to move more freely to narrow a current account deficit that reached 16 percent of GDP.
S&P cut its assessment on Belarusian debt one step to B, five steps below investment grade, from B+. The outlook is negative, meaning that S&P is more inclined to reduce the rating further than leave it unchanged. The country has B1 grade from Moody’s Investors Service, with a stable outlook.
The former Soviet republic’s foreign reserves were at $3.4 billion in December, a decrease of 36 percent from a high of $5.3 billion in April 2010, according to IMF data compiled by Bloomberg.
Belarus sold its debut dollar bonds last year, offering a total of $1 billion, and borrowed $800 million in seven-year debt in January. The yield on 2018 securities jumped 61 basis points to a record high 10.636 percent yesterday.
The country’s 2012 bonds denominated in Russian rubles fell, pushing the yield 49 basis points higher to 9.94 percent, the highest since the notes were sold in December.
To contact the reporters on this story: Agnes Lovasz in London at alovasz@bloomberg.net; Ilya Arkhipov in Moscow at iarkhipov@bloomberg.net
To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net
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