Putin forgives Lukashenko’s $1 billion debt
President of Belarus Alexander Lukashenko has reached an agreement with Vladimir Putin to refinance Minsk’s 1 billion dollars debt owed to Russia.
“We have agreed with the President of Russia, and today our Prime Minister will hold talks with Mikhail Mishustin about refinancing,” said Lukashenko at a meeting on the development of the essential organizations of the Ministry of Industry.
“That is, we will keep this billion dollars loan, as agreed with Russia, we will keep it,” he explained, adding that it “will be a good reinforcement for our national currency.”
For the second day, The Belarusian ruble has been trading at historical lows after Belarusians rushed to purchase foreign currency to preserve their saving from the economic crisis.
On Thursday, the Belarusian currency fell to 2.67 per dollar and 3.17 per euro, losing 27% and 35% respectively since the beginning of the year.
According to Lukashenko, the devaluation was the result of actions of “internal scoundrels” who “want to destabilize the financial market, the take the foreign currency out of the banks.”
“We have absolutely enough reserves to keep the exchange rate at an acceptable level,” Lukashenko said, without specifying which exchange rate he considers acceptable.
As of August 1, the Central Bank of Belarus had $9 billion in foreign currency reserves, of which only 4.5 billion is the tangible cash, and the rest is gold, a position in the IMF and other assets.
Belarus’ foreign debt exceeds the foreign Exchange Reserves by half, reaching $16.7 billion, half of which is owed to Russia.
This year Minsk had to pay $3.6 billion to foreign creditors. Of this amount, 2 billion has already been repaid, partly due to money raised from the placement of Eurobonds in early summer.
The total foreign debt, including loans from banks and corporations, mainly government, is $39.5 billion.
About half of this amount comes from short-term debt, which needs to be repaid or refinanced in the next 12 months.