Belarus announced that it can no longer pay off its foreign currency-denominated debt due to Western sanctions.
The possibility of repaying debt obligations in foreign currency in the standard manner is currently limited due to the sanctions against Belarus
said the country’s finance ministry couple of days ago in a statement.
Belarus announced in late June that instead of dollar payments due on its foreign bonds, the country would pay off its foreign currency-denominated debt in local rubles to an account at Belarusbank.
The World Bank said on Monday it placed all loans from its main lender’s division to Belarus into “nonperforming” status. The effect is immediate, citing $68.43 million in unpaid payments.
The EU and the USA also imposed sanctions on Belarus, as the country led by Alexander Lukashenko cooperates closely with Russia, even though it was not yet a direct participant in the war in Ukraine. (The Russians launched the offensive against Kyiv from Belarusian territory.)
Russia went bankrupt in June due to Western sanctions. Russia, like Belarus, intended to pay off its foreign currency-denominated debt. However, the banks of Western investors could not accept the transactions.
State bankruptcy is a serious loss of reputation, but it does not necessarily mean a real lack of solvency. Besides the loss of reputation, the Western sanctions significantly limit the country’s financing sources.
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