She will receive Russian money despite refusing to fulfill privatization promises

The EurAsEC Anti-Crisis Fund will allocate the fourth tranche of the stabilization loan to Belarus, despite the fact that Minsk did not fulfill its privatization obligations this year. According to the head of the Russian Ministry of Finance, Anton Siluanov, privatization will be taken into account when issuing the next, fifth tranche. Russia de facto paid Belarus for another deferment for carrying out economic reforms - with these funds, Minsk delayed the privatization of state assets by at least a year and will refinance up to half of its public debt in 2013.

The EurAsEC Anti-Crisis Fund on Friday agreed to give Belarus the fourth tranche of a stabilization loan worth $440 million, said the head of the Russian Ministry of Finance, Anton Siluanov, who then took the post of Chairman of the Board of the Eurasian Development Bank (EDB). Mr. Siluanov recalled that there is a list of activities that Minsk had to complete in order to receive the fourth tranche of the loan. “We agreed on adjustments for certain indicators. We had no grounds for not providing the next tranche,” said the Russian minister.

We note, however, that the initial requirements for Belarus to allocate an anti-crisis loan from the EurAsEC of $3 billion were not met. The requirements regarding Minsk's privatization obligations, which the head of the Russian Ministry of Finance promised to insist on six months ago, have undergone adjustments. In June 2012, he stated: “We expect that the conditions of privatization will be fulfilled when the fourth tranche is provided.” In addition to tightening financial policy (which the Ministry of Finance refers to as a fulfilled obligation), Minsk, in exchange for providing a loan to the EurAsEC of $3 billion, pledged to annually privatize state property worth at least $2.5 billion within three years. The last time Belarus fulfilled this condition was in 2011 , selling to Gazprom the remaining 50% of the gas transport monopolist Beltransgaz in state ownership.

Already in mid-2012, President of Belarus Alexander Lukashenko publicly rejected the list of enterprises planned for sale prepared by the government, saying that Minsk was in no hurry to part with state property. Nevertheless, the third tranche of the loan (also $440 million) was allocated to the republic after the visit of the newly elected Russian President Vladimir Putin to Minsk and his statements about common positions with Mr. Lukashenko. World Bank experts, in a country economic memorandum published on June 10, warned: Belarus managed to obtain a loan and agree with Russia on gas prices, but “it is unknown whether this opportunity will be used to intensify market reforms or to further delay them; The facts available so far point to the latter option.”

On November 16, the final refusal to fulfill the terms of the loan was confirmed by the Prime Minister of Belarus Mikhail Myasnikovich (see Kommersant on November 19). “As for privatization, we will not meet the 2012 target of receiving $2.5 billion from the privatization of state property. But I would not make a tragedy out of this, since we have other ways of maintaining gold and foreign exchange reserves,” the head of the Belarusian government noted then, clarifying that privatization should serve to modernize enterprises, their integration into transnational companies and strengthening their positions in the world market. It is noteworthy that the position of official Minsk in parting with state property coincided with the position of the Russian authorities, who also repeatedly shifted privatization plans - under the pretext of waiting for favorable market conditions.

On Friday, official representative of the Ministry of Finance Andrei Matveev confirmed to Kommersant that changes in the requirements for Belarus for the provision of the next tranche of the EurAsEC loan “affected privatization issues,” but could not answer the question of which assets and in what time frame in the new version of these requirements Minsk should privatize to receive the fifth tranche of the loan. Also, the representative of the department refused to discuss what Russia exchanged for another “privatization” delay for Belarus. Commenting on the EDB’s decision to allocate further funds to Belarus, Finance Minister of Belarus Andrei Kharkovets assured that Minsk will assume obligations “as part of subsequent actions to continue a tight monetary policy and budgetary policy.” The next meeting of the EDB Council is tentatively scheduled for May 2013 and will be held in Moscow.

“The money will arrive in the near future,” Mr. Siluanov promised on Friday, assuring that “there was no politics in making this decision.” Mr. Kharkovets promised: by “attracting two tranches of a EurAsEC loan in the amount of $900 million” and “entering international capital markets with a view to possibly placing government bonds in 2013,” Belarus expects to “almost half” refinance its financial obligations “and reduce the volume of payments next year to the level of this year.”

Oleg Sapozhkov, Yuri Barsukov

Belarus is more valuable than money