Barys Zhaliba: We take new foreign currency loans to pay off old ones

• 8.05.2015, 15:44

The foreign currency debt of hundreds of Belarusian companies was about 10 million dollars at the beginning of the year.

Economist Barys Zhaliba explains to Radio Racyja why it is dangerous for companies and the state.

“It is the so called short-term corporate debt. It is current loans in foreign currency that many companies take to buy something. They pay them, so this debt is not dangerous. The external debt is worse. It is a long-term debt, and our economy can pay it on schedule only due to refinancing. We take new loans to pay off old ones,” he said.

– Why is the corporate debt is dangerous for the economy?

– We mustn't forget about it in any case. We saw in history that certain countries faced a deep economic crisis due to both foreign debt and corporate debt. Some companies pay their loans, but others don't. We need to consider every particular company that takes a loan. Is it able to pay the loan or not? If not, it is not normal.

– Will the corporate debt grow in the current economic situation?

– It grows depending on GDP growth. GDP doesn't grow in Belarus. Taking into account the fact that the economic state of Belarusian companies doesn't improve, the share of the corporate debt in the state's external debt may increase.