Not everything that is a defect for independent foreign analysts is precisely a defect for Belarusian state economists. The foreign rating company Fitch subjectively assessed the solvency of Belarus. This is the reaction of the Ministry of Finance. plazo score in currencies up to a point of pre-default or up to a default, reports belSat.
On July 7, Fitch Ratings downgraded Belarus’ long-term exchange rating from CCC to C. It means “the initiation of a default or a process similar to the default, or that of the entity issuing the bonds. “The Finance Ministry explained that it was “active”. It paid bondholders in February, but London-based Citibank suspended its operations as a representative of Belarusian Eurobonds as part of monetary restrictions applied in the West.
Economist Alexei Harkevich explains:
“What the Ministry of Finance is doing is acting for action. It cannot influence the situation. It wasn’t the Treasury Department’s moves that caused a technical defect.
Next year, the ministry will have to pay its investors all of their securities. It is a way of doing it in national currency.
“They can’t do anything financially until the army’s challenge is resolved. It is a one-way street that will lead to non-compliance. Definitely,” Harkevich said.
If the “technical default” sounds strong, the borrowing country’s score will drop considerably. Secondly, the consequences of the countries that have granted us loans are possible.
“Lenders would possibly have the condition that a default on government bonds gives the right to demand a net repayment of that loan. Therefore, it works as a trigger. This allows all our creditors to come to us and say: you are not a trusted borrower, so give us everything back immediately,” said Katerina Bornukova, educational director of the BEROC centre in Belsat.
However, what changes Fitch’s existing assessment of Belarus’ solvency?
“The technical defect solves the thing. We have won and will get new foreign loans in the near future. At least in the money market, those loans, which are negotiable,” sums up Katerina Bornukova.
Russia has been on a stage with Eurobonds. An investor organization asked to recognize the default. In addition, they demanded only about two billion dollars in interest on late payments. Belarusian Eurobond holders are still waiting.