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Minsk reluctant to use Belaruskali stake to secure $2 billion loan

Belaruskali is unlikely to take out a $2-billion loan from Russia’s Sberbank and Deutsche Bank on terms proposed by them, Valery Kiryyenka, director general of the Belarusian potash giant, told reporters in Salihorsk on Thursday.

“I am sure that our government will not agree to the terms put forward by the Russian side,” the Belarusian government’s BelTA news agency quoted Kiryyenka as saying. “Our situation is not that much bad to accept them.”

The two banks wanted the loan secured by export orders and a 35-percent stake in the company.

Economist Syarhey Chaly says the statement might be intended to force the creditors to offer better terms. He adds that the government may no longer need foreign cash to replenish foreign exchange reserves.

Earlier, the government approached the International Monetary Fund (IMF) for a loan of $3.5 billion to $8 billion. Officials said recently that the country needed at least $2.5 billion to create a financial safety cushion and unify exchange rates. Observers said that the government might have intended to use Belaruskali’s loan for the purpose.

If the government requested the loan directly, its foreign debt would rise and credit would be more expensive.

Earlier, Belaruskali borrowed $300 million from Azerbaijan against the government’s guarantee and transferred the money to foreign exchange reserves, as Kiryyenka told reporters. The company expects its profit to total $3 billion this year, so it does not seem to critically need the $2 billion.

The use of Belaruskali’s stake as collateral would guarantee the Russians that the government would not sell its stake to Indian or Chinese bidders. Therefore, they are interested in extending the loan.

Minsk-based economist Leanid Zaika says that the Belarusian government might have decided against taking a risk of losing a stake in the company. “The offered terms of the loan were equivalent to the company’s takeover with the help of the Germans,” Zaika says.

He adds that $2 billion would not be enough to unify exchange rates.

Zaika says that the government might be in talks with other creditors. “Minsk has a friend, [Venezuelan President Hugo] Chavez, who decided to shift $40 million from US banks to other countries, including Russia. Belarus could get some of the money,” Zaika said.

“The government might have decided to introduce a flexible exchange rate and does not need foreign exchange reserves to prop up the rubel. So it no longer needs the $2 billion loan,” says Chaly.

With a flexible exchange rate, the National Bank would not need interventions as the rate will be determined based on the market demand and supply, says Chaly.

To replenish reserves the government may use revenues from the planned sale of a 50-percent stake in the Beltranshaz pipeline system to Gazprom, which already holds a 50 percent interest in the company.

“The $2.5 billion would help the government address many issues, in particular replenish foreign exchange reserves and meet privatization requirements under a EURASEC loan. In that case the government would not need $2 billion against Belaruskali’s shares,” Chaly says. //BelaPAN