How much cost Belarus the first month of the oil crisis?

The financial implications for our country has already been quite substantial.

In January of this year, foreign currency deposits of households and enterprises, and foreign currency reserves of Belarus decreased by 503 million dollars. This was due to a decrease in revenues of the refinery and the budget from the export of petroleum products, as well as significant volumes of public debt.

Belarus lived another two months in the conditions of new relations with Russia in the oil market, and the financial implications for our country has already been quite substantial. And the problem is not only that the country has reduced foreign exchange earnings, but also in changing the behavior of people and companies in the financial market.

Banks lose on foreign-currency deposits

First and foremost, of course, the events affected the financial condition of the refineries. Data on this yet, but there is evidence of change in the value of savings of Belarusian enterprises in banks. And here the situation is sad.

Currency funds of legal entities in January of current year has decreased in comparison with December 235,5 million to $ 4.27 billion dollars, while in January last year, they increased by 133.3 million. The value of securities denominated in foreign currency, which is outside of Bank turnover in January 2020 fell by 4.8 million dollars – up to 727,8 million dollars. In January 2019, the decrease amounted to 20.5 million dollars.

Thus, the banking system of Belarus for a month lost of funds of enterprises on 235,5 million. It’s hard to say which part of these losses in the refinery, but, apparently, very significant.

However, individuals in January of the current year accumulated currency in banks, but not as active as a year ago. The amount of foreign currency funds on all deposits in banks grew in January at 16.3 million to $ 7,55 billion. In January last year it rose by 72.2 million dollars. It can hardly be attributed to the decrease in monetary incomes of the population most likely reason is the sharp decrease in interest on foreign currency deposits in Belarusian banks. The average interest rate on new long-term foreign currency deposits fell to 1.16% in January, from 2.23% in January 2019.

The importance of rates indicates that term deposits of individuals denominated in foreign currency in January fell by 17.5 million dollars to 6.2 billion dollars, while January of last year, these deposits rose by 48.3 million. Thus, the attitude of the population to Express foreign currency deposits for a year has changed dramatically.

Transferable currency deposits of natural persons, that is, basically, their means on credit cards in January of the current year increased by 33.9 million dollars compared with December and made up 1.36 billion. This is slightly higher than the increase in January 2019, amounting to USD 23.9 million. In this case, the effect of rates is insignificant as the rate on such deposits has long been close to zero.

Therefore, foreign exchange savings of the population and enterprises of the Republic of Belarus in January decreased by 219,2 million dollars.

Reserves spent on payment of debts

But enterprises have lost currency and the state. In January of this year, the international reserve assets of Belarus dropped by 150,4 million dollars and was made on February 1 of 9.24 billion. As reported in the National Bank of Belarus, the decrease in reserves is due to the repayment of the government and the national Bank of its external and internal obligations in foreign currency at 556 million dollars.

In this case, reserve assets in foreign currency in January increased by 69 million dollars to 5.63 billion. But other assets in foreign currency decreased by 351,3 million dollars and was made on February 1 584,5 mln. And the price of gold, part of the reserves increased during the month to 133.4 million dollars and reached 2.52 billion. dollars. This increase is achieved not by adding physical gold in reserves and an increase in its prices on the world market. That is, currency reserves excluding gold, in January declined not to 150,4 million dollars, and to 283,8 million dollars.

Thus, in just 1 month the country has lost 503 million dollars (Bank deposits and government foreign exchange reserves).

Despite the decline in January, the international reserve assets of Belarus on 1 February of the current year was much higher than the planned level. According to the Basic directions of monetary policy of Belarus, at the end of the year they should be at least 7.3 billion dollars. This is almost $ 2 billion less than the current value of reserves, i.e. the country has quite a significant reserve currency.

Apparently, therefore, the government and the national Bank to remain calm. In particular, the head of the national Bank Pavel Kallaur at a press conference on 12 February stated that the amount of foreign exchange reserves at the end of 2020 will be closer to the current level than to the level laid down in the documents, which corresponds to a conservative scenario in the global and Belarusian economies.

Are optimistic and the Finance Minister of Belarus Maxim Ermolovich. 17 February, he met with Lukashenka and said that in the budget sufficient funds in order to fulfill this year, all social obligations undertaken by the state, as well as payments on external debt. It is really so. A significant part of the external debt of the Republic of Belarus may be refinanced. So, Maxim Ermolovich said that currently the Ministry of Finance is carrying out preparation work for the placement of Belarusian Eurobonds in the near future the technical readiness to leave the country with them to the market is achieved. If the situation be favorable, the Ministry of Finance will place bonds. We are talking about the amount of 1-1,2 billion.

Companies lose and rubles

From a purely financial point of view, the position of Belarus yet seem quite durable. But the heads of financial institutions do not take into account the subjective factor. The crisis in relations between Belarus and Russia could deepen, because Alexander Lukashenko and Vladimir Putin is clearly not going to yield to each other. The Belarusian leader seems to be hoped that the prospect of strengthening economic ties with Western countries scare the Russian President. But the Russian President is unlikely to enjoy that intimidate him.

This means that the economic relations between the two countries are likely to continue to deteriorate. It should take into account the subjective factor: the population and enterprises of Belarus, observing all this, will be all the more worried and try to transfer their savings into foreign currency.

So far, however, this is not happening, at least not in significant volumes. In January of this year, urgent ruble deposits of population in Belarusian banks increased in comparison with December 133.7 million rubles (to 5.27 billion), which exceeded the increase in January 2019, is equal to 92 million. Transferable ruble deposits of individuals, that is, in General, funds on their settlement accounts in January decreased by 86.9 million rubles – to 2.94 billion. In January last year, the decline was much more 373,7 million.

At the same time, the Belarusian company, in January lost their rouble deposits to 1.16 billion rubles. This is partly a seasonal phenomenon, but in January 2019, their contributions have not declined as much: 0.67 billion rubles, that is almost 2 times less. Thus, and ruble resources of Belarusian enterprises in the current year suffered from the oil crisis. But this is only the beginning.

Vladimir Tarasov, “Baranok”