2023-05-01 21:30:19
Illustration of the “Cost of Government” project, t.me/naszyhroszy
In April, the Ministry of Finance of Belarus continued to issue bonds in dollars on the domestic market. They wanted to issue for $30 million, but received applications for $13 million, and only managed to sell for $7.5 million. It should be noted that the bonds at the same time were distributed at 4% per annum – these are quite favorable conditions, but even the Belarusian investor did not “peck” on them. Why? Most likely, because confidence in the national financial system, which began to timidly revive before 2020, again turned out to be “below the plinth”. People and business understand that the likelihood that the government may decide, for example, to pay obligations on bonds not in dollars, but in “proteins”, is by no means zero.
As a result, as we can see, there are fewer people in the country who are ready to lend money to the government. But it does not lose hope, and like a classic alcoholic who lives only for today, he leaves the house, where he is no longer trusted, and tries to beg money from his neighbors. We have only one neighbor, still capable of lending – Russia. It is there that Belarus is going to sell five lots of government bonds, each lot – 10 billion Russian rubles.
What is interesting in this story is at what percentage the Belarusian authorities undertake to take money – they declare about 12% per annum on three-year bonds. For comparison, we used to borrow on the Russian market at 8%, and it was already a lot. And now, watch your hands: according to official data, the profitability with which Belarusian companies work is 7-9%. Great business – your economy earns on average less than 10%, and you borrow at more than 10%. A reasonable question arises: how does the government plan to give money away?
As we mentioned above, it is no coincidence that such decisions are reminiscent of those made by a deep drinker who needs to get money for another bottle at any cost. He shoots up paycheck time after time, not repaying past debts until they accumulate into a critical mass. The consequences of such behavior are inevitable, but few people care when “a matter of life and death” is at stake.
By the way, even Russian investors have to be convinced that it is possible to do business with Belarus. The fact is that Russian holders of Belarusian government bonds in foreign currency experience difficulties with the return of money: for example, our Ministry of Finance required Russian investors to come for money in person and open an account in a Belarusian bank, where they will receive “proteins” (at the exchange rate) the required amount has been credited.
But let’s imagine that all the planned five lots of government bonds are sold out, and the Ministry of Finance managed to get 50 billion Russian rubles for this. This means that as early as next year, more than 6 billion Russian rubles of interest will need to be paid on this debt alone, and 18 billion Russian rubles in three years. That is, simply for the use of this money, we will have to pay about 240 million dollars by 2025 at the current exchange rate. Well, and then, of course, it will also be necessary to return the money that was borrowed. And this is not to mention the already accumulated debts.
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