Belarus Country Report Apr19 - April, 2019

April 4, 2019

The Belarusian government forecasts the nation's GDP growth at 2.1% year-on-year in 2019, 2.5% y/yin 2020, and 2.8% y/y in 2021, according to the cabinet's medium-term fiscal programme for 2019-2021 approved on March 6.

The economy is doing relatively well after several years of instability, but the change in the way Russia taxes its oil exports – the so-called tax manoeuvre.

According to the Belarusian finance ministry, the country’s budget revenue losses from the tax manoeuvre in 2019 alone were estimated at BYN600mn ($300mn), and that the losses might total $2bn by the end of 2024. The two sides are still negotiating a deal that may include some form of compensation.

Recently, the Belarusian government was forced to revise downward its forecast for the country’s GDP growth in 2019 (from 4.5% y/y to 2.1% y/y). According to Belarusian officials, the new forecast takes into account recent changes in the external economic environment, including changes in oil prices and the economic situations of the country's major trading partners, specifically Russia, and the values of their currencies.

The government has also managed to hold off from tapping the international capital markets as it attempts to pay down some of its external debt – about three quarters of which will still need to be refinanced. In November 2018, the government said that Minsk should repay around $5.4bn of the state debt in 2019-2020.

Belarus' foreign debt amounted to $16.7bn as of March 2019, the country's Finance Ministry said on March 29. The foreign debt amounted to $16.7bn, decreasing by $0.2bn or 1.3% from the beginning of the year, the ministry said.

Russian President Vladimir Putin greenlighted the allocation of a new $600mn government loan to Belarus, at the start of April that will take some of the financing pressure off Minks, which will use the money to repay previous Russian loans.

The minister also underlined that the Russia-led Eurasian Fund for Stabilisation and Development (EFSD) is considering the allocation of the seventh $200mn tranche to Minsk.

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