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Belarus expected to spend $3.5bn on state debt in 2020

Economy 23.08.2019 | 16:11

MINSK, 23 August (BelTA) – The volume of payments on the state debt is expected to reach $3.5 billion in 2020, BelTA learned from an article by Belarusian Deputy Finance Minister Andrei Belkovets in the ministry's magazine Finance, Accounting, Auditing.

The Finance Ministry intends to raise about $1 billion using non-debt sources and get the remaining sum refinanced. Eurobonds are expected to be the main tool in the process.

Andrei Belkovets said: “At present we see good demand for Belarusian securities. If it lasts, the assigned tasks will be fulfilled.”

According to the source, trust in Belarusian securities is on the rise as well as the number of those willing to buy them. The cost of borrowing is declining while the maturity period is growing larger. While in 2011 the Finance Ministry floated eurobonds for a period of seven years with the interest rate of 8.95% per annum, the final deal in July 2018 boasted the maturity period of 12 years and the interest rate of 6.2%. “It is possible the terms will become even better later on,” he added.

This year's cost of the state debt is estimated at $3.2 billion. The forecast takes into account the risk of growth of floating interest rates and possible changes of the currency exchange rate. This is why the actual price may be even lower at the end of the year. Out of the total sum as much as $1.1 billion will be spent on servicing the debt. The Finance Ministry intends to use state budget revenues without tapping into financial markets in order to raise the sum.

Another $2.1 billion will be spent on paying off the debt. The Finance Ministry hopes to get $0.8 billion by tapping into the budget surplus. “If reality exceeds initial expectations, the sum allocated for this purpose will be higher and the need to borrow will be lower,” the deputy finance minister specified.

Plans have been made to raise $0.7 billion by floating government bonds.

The Finance Ministry will try to raise another $0.6 billion on foreign markets. Hopes were high for a Russian loan initially. However, the Russian side has not made the final decision on the loan yet. Belarusian and Chinese partners have come up with options instead. A memorandum of cooperation has been signed and negotiations on terms of getting the credit resources are nearly finished.

This is why the refinancing amount Belarus needs this year has been fully covered and presents no reasons for concern, the deputy finance minister concluded.

The article also specified projections on paying off the state debt through 2024. Belarus will have to pay off $3.2 billion in 2021 ($2.3 billion to pay off the principal sum and $0.9 billion to service the debt), $3.3 billion in 2022 ($2.5 billion and $0.8 billion), $3.8 billion in 2023 ($3.1 billion and $0.7 billion), $2.6 billion in 2024 ($2.6 billion and $0.6 billion).

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