During last Sunday's visit to the area affected by the Chernobyl disaster, Belarusian President Alexander Lukashenko told reporters that his country's foreign debt has not yet reached a critical level thus challenging the suggestions of some Russian officials. Observers believe that Mr Lukashenko's remarks were aimed at Vladimir Putin, who has recently questioned Minsk's ability to service its foreign debt.
In response to an evidently staged question concerning Russian officials' assertions that Belarus had exceeded the safe foreign borrowing limit, Mr Lukashenko said that the country's foreign debt had not exceeded 8% of GDP, while the allowed limit was 25% of GDP.
Observers also noted that Vladimir Putin had spoken on the issue about a week ago. After expressing Russia's willingness to grant Belarus the remaining 500 million roubles of а 2 billion rouble loan, Mr Putin noted that the "debt burden on Belarus was becoming threatening."
"Those in Russia and other countries who say that we have exceeded the safe borrowing limit are afraid that we will ask them for loans, and they are telling us in advance that they will consider whether or not to grant them," said Mr Lukashenko in response to Mr Putin's statement. "We have heard them....We are not going to ask them for anything. There is no need to prompt us." According to Mr Lukashenko, if need be, Belarus will ask "other people for loans."
Finally, Mr Lukashenko noted that "over the last year and a half Russia, contrary to bilateral agreements, has increased oil and gas prices, thus extorting $10 billion from Belarus." The Belarusian President further complained that "they lent us $2 billion at a high interest rate that can no longer be found anywhere in the world."
However, besides "Russian officials", independent Russian and international experts have also expressed concern about Belarus's rapidly increasing foreign debt. Such experts acknowledge that because Belarus had practically no foreign obligations until last year, the country's foreign debt is not large. What worries them, however, is the current pace of borrowing. In 2008, the foreign debt increased by 59.2%, totalling $14.8 billion. The national debt was within 6% of GDP, while total debt amounted to 25% of GDP. In accordance with a plan to manage the foreign debt that was worked out at the end of last year, the total debt threshold is 50% of GDP.
After granting Minsk a loan, the IMF emphasised that Belarus would be able to repay its debt if it followed certain guidelines, the most important of which was the implementation of market reforms. According to local analysts, the Belarusian reforms are superficial, and the core of the country's economy continues to operate according to government models.
The former head of the Belarusian National Bank Stanislav Bogdankevich told NG that the loans could have been useful had the economic model been changed, and that the Government should refrain from excessive state regulation. He believes that the current model is not conducive to competitive production, meaning that repaying the loans could become a problem. In the first quarter of 2009 alone, Belarusian exports decreased by 50%.
By Anton Khodasevich