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External Public Debt of Belarus Breaks Historical Record

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External Public Debt of Belarus Breaks Historical Record

The previous maximum for this indicator lasted only a month.

The banki24.by website tells what will happen to the state debt in 2021.

Information on the state debt in Belarus comes with a month's delay. The data for December 1 became known recently. By this date, the external national debt again broke the record for the largest in the entire sovereign history.

As of December 1, the external public debt amounted to USD 18.151 billion. A month earlier, Belarus' foreign liabilities reached USD 18.121 billion, which was the previous record.

We can already say that the series of records will continue in 2021. On December 30, the Ministry of Finance of Belarus reported on the receipt of the first tranche of the Russian state loan to the accounts.

The money from the Russians was transferred in rubles but in the equivalent of USD 500 million. Consequently, if nothing fundamentally changes, a new record for external public debt will be shown by the first reporting date of 2021. The Ministry of Finance will publish its exact value by the end of January.

The issuance of the second tranche of the state loan of the Russian Federation is scheduled for 2021. The resources are also planned to be received in the equivalent of USD 500 million but in Russian rubles. If there are no large payments on the national debt in the month of receipt of this money, then the January record will almost certainly not stand.

Earlier, banki24.by wrote that the strategy of the authorities in the coming year is refinancing - that is, getting into new debts to pay off old ones. According to the Finance Ministry's plans, refinancing will amount to USD 975 million, of which USD 775 million will come from external markets and USD 200 million - from internal markets.

Government debt refinancing is a forced strategy since Belarus has an extremely tough schedule of public debt payments relative to the economy's size.

For several years in a row, total payments have fluctuated around 3 billion USD, and there is no end in sight. Economic growth in the Republic of Belarus is anemic, the national debt is almost entirely in foreign currency, and regular devaluations negate the government's attempts to "grow out of the national debt."

So in 2021, the total payments on the state debt will amount to about USD 3.1 billion, of which USD 3 billion will be paid for repayment and servicing in foreign currency. An increase in this amount is not excluded since circumstances may change for the authorities in the worst way.

External public debt compared to GDP reached 30.1%, which is the highest value since January 1, 2018. Domestic public debt added another 6.1% of GDP and, as a result, the total public debt amounted to 36.2%. The authorities' estimates at the end of 2021 suggest an increase in the national debt to 38-40% of GDP.

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