Minsk blames western sanctions for pushing Belarus into default

 The Belarusian finance ministry said Western sanctions that have limited Minsk’s ability to deal in foreign currencies are pushing the country into default despite Minsk being able to service its debts.

Belarus did not pay the coupon on its 2027 Eurobond due on June 29.

Following the expiry of a 14-day grace period, global rating agency Fitch on Monday downgraded Belarus’ long-term foreign currency rating to “restricted default” from “C”.

Last week, rating agency S&P Global kept Belarus’ foreign currency rating at “CC/C” but said it could lower it to “selective default” if the bond payments are not made in their original currency by the end of the grace period.

Minsk had said earlier that it was ready to pay the external obligations in the local currency, the Belarusian rouble.

“A paradoxical situation is emerging. There is an issuer – the Ministry of Finance, which is ready to work directly with the (bond) owners in order to fulfil obligations, despite the existing restrictions on making payments through international payment systems,” the ministry said in a statement.

It said some creditors were “open to working with the issuer to realise their rights”.

“However, there are third parties whose actions are definitely aimed at reproducing artificial default phenomena, following the general line of the West,” the ministry said.

Belarus has been hit by Western sanctions over its support for Russia’s invasion of Ukraine. Minsk also had sanctions imposed on it over a disputed 2020 presidential election and the government’s subsequent crackdown on protesters.

It currently has five Eurobond issues, all of them in U.S. dollars, with an outstanding amount of about $3 billion.

The ministry said that it was impossible to be limited to “standard practices and metrics” in such non-standard times and the country was trying to resolve the situation with payments.

“The judgements of individual rating agencies about default should be applicable to Western infrastructure, which has clearly demonstrated its indifference to investors,” it said.