FILE PHOTO: Belarusian state flag and emblem are seen on a building at Independence Square in Minsk, Belarus November 7, 2019. REUTERS/Vasily Fedosenko
July 8, 2021
By Katya Golubkova
MOSCOW (Reuters) – The Belarus finance ministry sees little impact from European Union sanctions on its ability to service its external debt obligations, it said in a statement to Reuters on Thursday, adding that Russian funds and other sources would help.
The European Union imposed wide-ranging sanctions on Belarus last month in response to the grounding in May of a Ryanair plane flying over Belarus and the arrest of an opposition journalist and his girlfriend who were on board, a move some EU politicians likened to air piracy.
The sanctions which followed ban EU entities from investing in new Belarusian state debt, including bonds and loans issued after June 29, with a maturity of more than 90 days. The European Investment Bank will halt lending too.
Yet rating agencies and analysts have said that sanctions designed to punish the veteran leader Lukashenko for a sweeping political crackdown will leave him largely unscathed and still able to continue financing the economy and his security forces.
“Introduction of EU sanctions does not change… Belarus principles of fully respecting its obligations towards redeeming and servicing of the state debt,” the finance ministry said in emailed comments.
Belarus did not plan to raise Eurobonds this year and would take up the option to receive $500 million in the second tranche of a Russian loan agreed last year, as well as tap both its domestic and Russian bond markets along with some other tools, it added.
In the mid-term, it may also go to the Asian markets for the refinancing funds, in addition to Russia and its domestic options, the ministry said. China and Russia are Belarus top creditors.
The EU sanctions did not touch the main type of potash Belarus is exporting and also excluded the state-owned Development Bank of Belarus, the only bank with outstanding Eurobonds, from the sanctions list.
The Belarus finance ministry said on Thursday it did not plan to raise EU funds or use the Development Bank as a loophole, but added it may borrow up to 100 billion roubles ($1.3 billion) on the Russian bond market between 2021 and 2023.
Despite no immediate impact, Moody’s ratings agency said earlier that the new EU sanctions posed significant downside risks to its gross domestic product forecast for Belarus currently set at 1% for 2021.
($1 = 74.8681 roubles)
(Reporting by Katya Golubkova; Editing by Hugh Lawson)