Belarus Country Report Feb18 - February, 2018

February 2, 2018

The Belarusian economy is doing well as it is being lifted by the economic revival in Russia. The country has emerged from recession as a result of improved trade flows. At the same time Eurobonds issued in 2017 have provided the refinancing for all the debt redemptions due in 2018.

On the political front a nasty trade row with Russia over oil has been settled and the EU continues to woo Minsk in an attempt to drive a wedge between Minsk and Moscow – without much success.

Belarus' economy is performing better than expected in 2017. The nation's GDP grew last year after two years of recession: Belarus' GDP contracted 3.9% y/y in 2015 following 1.6% y/y growth in 2014.

Belarus' GDP grew by 2.4% year-on-year in 2017, the country's Prime Minister Andrei Kobyakov told a cabinet meeting of January 16.

The World Bank forecasts Belarus economic growth in 2018 at 2.1% year-on-year, the multinational lender said in its report Global Economic Prospects published on January 10. The multinational lender also forecasts the nation's 2019 and 2020 GDP growth at 2.4% y/y.

The International Monetary Fund (IMF) revised recently its forecast for Belarus' GDP this year upwards to 0.7% y/y growth versus the earlier expectation of a contraction of 0.8% y/y (in April's forecast of the fund).

Inflation in Belarus stood at 0.2% month-on-month and 4.6% year-on-year in December, the national statistics agency Belstat reported on January 11. That has lead to growth-boosting rate cuts.

Trade is driving the growth. In January-November 2017, Belarus' export of goods and services surged by 21% over the same period of 2016 to $32.833bn, according to National Bank of the Republic of Belarus.

In January-November 2017, Belarus' foreign trade in goods and services amounted to $65.308bn (up by 20.7% from the same period a year prior).

Export of goods and services totalled $32.833bn (up by 21%); import made up $32.474bn (up by 20.4%). Belarus had a $358.8mn foreign trade surplus.

The foreign exchange reserves of Belarus declined by $98.4mn or 1.3% month-on-month to $7.315bn in December, following a 0.2% m/m growth in November, the National Bank of Belarus (NBB) said in a statement on January 5.

The result was attributed to December's debt repayments totalling $500mn. At the same time, the NBB was able to reduce the decline of the reserves by the channelling of revenues from the collection of export duties on oil products, as well as the placement of forex-denominated bonds.

The external state debt of Belarus totalled $16.6bn as of December 1, up by $2.9bn or 21.3% from early January, according to the Finance Ministry in Minsk.

Belarus is going to place Eurobonds worth $600mn in the first quarter of 2018, the nation's Finance Minister Vladimir Amarin told journalists on December 18. As much as $400mn will also be borrowed on the home market.

In January-November, external state borrowings totalled $3.77bn, including $1.4bn borrowed via a recent Eurobonds placement, and $800mn from the Russia-led Eurasian Fund for Stabilisation and Development (EFSD). Belarus also borrowed $1.194bn from Russian banks and the government; $228mn from Chinese banks; $141mn from the International Bank for Reconstruction and Development (IBRD); and $5.6mn from the European Bank for Reconstruction and Development (EBRD) and the Nordic Investment Bank (NEB).

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