Vadzim Iosub: China’s loans will be directed to support Chinese, not Belarusan economy

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The loans offered to Belarus by China don’t dismiss the need of searching money for cancelling Belarusan external debts.

China will allocate more than a $7 billion loan to Belarus, stated the Economy Minister Uladzimir Zinouski at the Belarus-China interregional business forum.

“The memorandum opens new prospects for cooperation in building up Belarus' national rating industry, providing an independent objective assessment of the credit status of Belarusian companies and joint Belarusian-Chinese projects and the access to the financial markets of China and the special administrative district of Hong Kong,” the Economy Minister told upon signing a memorandum of cooperation with China's leading independent rating agency Dagong.

How beneficial are China’s loans for Belarus? Will they affect Belarusan economy?

Vadzim Iosub, senior analyst of “Alpari”, answered the questions of the “EuroBelarus” Information Service.

- China is allocating $7 billion to Belarus: $3 billion for concessional crediting and $4 billion as a commercial loan to Belarusan banks for funding business projects. What are the terms of the loans’ allocation?

- There was a huge misunderstanding with the figures: only $3.5 billion was confirmed, and these money are made of numerous loans given to different agents on different terms.

The receivers of the long-term loans – of 15 years and more with a five-year moratorium on interest – are the Development Bank of the Republic of Belarus and Belarusbank; other receivers of loans are unknown yet.

Loans interest rate is less than 5 per cent a year. Such terms are quite beneficial for Belarus – for the moment it is very hard for our country to find loans on such terms.

But the majority of allocated sums are restricted loans. $700 million allocated to the Development Bank of the Republic of Belarus and $300 million for Belarusbank will go to funding state programs with participation of Chinese partners.

Money for modernization of railway and 18 railway rolling-stocks will immediately go to Chinese suppliers.

- Why China is allocations loans to Belarus? Will its demand something in return?

- For today Chinese loans are profitable: they are three times cheaper than Belarus could have attracted at the market if we count by the profit that Belarusan Eurobonds make.

However, Chinese loans are not always effective. We know only few Belarus-China projects where Chinese equipment shipped to Belarus turned to be of low quality.

We need to take into account that China is a fast-growing country, but from the point of view of technologies it isn’t among the world leaders. From the technical perspective it’s much more profitable to cooperate with the American and European companies; however, neither the US nor Europe hurry to ship innovative technologies to Belarus, by this supporting Belarusan economy. That is why we have to be happy with what we have.

- Will China loans let us support Belarusan economy alive at least in 2015?

- We are not talking about support of Belarusan economy there: China loans will go for support of Chinese, not Belarusan economy. That is why Chinese loans don’t dismiss the need of searching money for cancelling Belarusan external debts. Negotiations with the EurAsEC Anti-Crisis Fund remain actual just as before.

- The head of the CPR came on a state visit to Belarus for three days. What interest does small Belarus present to the huge China?

- I think that Belarus has no particularly interesting actives. We are well aware how Belarus positions itself: the gates to Europe, a door to the market of the Eurasian Economic Union. But it is quite hard to understand how interesting is our country for the large China.

China is trying to befriend all countries in the world, and Belarus is only one of the countries that China is a friend with and is allocating funds to. Small Belarusan economy cannot take big place in external political and economic interests of China.