US sanctions pose a threat to Belarusian domestic borrowing in US dollars

introduced the fifth package of sanctions against Belarus, forbidding its citizens to buy its new government securities, regardless of the currency. Republic, borrowing in dollars and in the domestic market,

The US Treasury, in cooperation with the State Department, has introduced the fifth package of financial sanctions against Belarus since August 2020. One of its key elements was sectoral sanctions against the Belarusian government debt: the sanctions arm of the US Treasury Department OFAC prohibited American citizens and organizations from providing new loans to the Ministry of Finance and the Development Bank of Belarus (owned by the government) or buying new bonds of both state organizations for a period of more than 90 days. These restrictions apply to loans and bonds in any currency.

The Ministry of Finance of Belarus has not entered the foreign market since June 2020 - Western debt markets for the republic closed after the presidential elections and mass protests in August last year. There are almost no non-residents in the domestic debt market. However, the new US sanctions will still have a significant impact on Belarusian state borrowings. The country's Ministry of Finance will most likely lose the ability to attract dollars in the domestic market, since American correspondent banks will have to stop servicing these transactions, Brian O'Toole, former OFAC senior adviser, explained to RBC.

Domestic loans in dollars

In the heavily dollarized Belarusian economy, the local Ministry of Finance even issues domestic debt mainly in foreign currencies. According to the Ministry of Finance of Belarus (.pdf), currently outstanding issues of domestic government bonds worth $2.64 billion, or about 60% of the total domestic debt, are denominated in US dollars. The Development Bank has DOLLAR bonds for another $115 million in circulation, follows from its materials. The latest dollar bond issue of the Ministry of Finance was placed at the end of September for $17.4 million.

The United States imposed sanctions against the son of Lukashenka and the state debt of Belarus Politics