On Monday, October 17, the World Bank downgraded all loans made by the International Bank for Reconstruction and Development (IBRD) to, or guaranteed by, the Republic of Belarus into non-performing status. According to the World Bank’s official statement, this measure is taken when a country’s payment on any loan is overdue by more than six months.

The World Bank Group has not approved any new lending to Belarus since May 2020 and stopped all of its programmes in the country on March 2, 2022.

As of October 14, Belarus’ principle amount outstanding on IBRD loans is $967mn, 0.42% of the IBRD’s total outstanding loans. In total, Belarus owes the IBRD $68.43mn in overdue payments. The World Bank stated that “the effect on IBRD of Belarus loans being placed in non-performing status is a charge to income of about $12.75mn equivalent.”

This year Belarus has been struggling with repaying its loans to foreign creditors after its largest banks (and the banks of its closest ally Russia) were all disconnected from the international payment system SWIFT.

In June, Belarus’ Finance Minister admitted that Belarus had already begun having troubles with making its debt payments through international clearing and depository systems in February due to the Western sanctions. This statement was made in connection to Citibank’s resignation from its position as Belarus’ designated paying agent.

In late July and early August this year, Fitch Ratings, Moody’s and S&P all declared Belarus to be in restricted/selective default. In late August, the Belarusian government seemed to have given up on finding a new paying agent, as its First Deputy Prime Minister announced: “Do we have to look for it? It is not a matter of urgency for us for now.” Shortly after, Belarus’ Finance Ministry announced that it had in fact paid its 2026 and 2031 Eurobond holders $38.6mn in interest.

While Belarus does hold about $7.5bn worth of gold and foreign currency reserves, only $3.1bn of these are in liquid FX assets. Meeting its large Eurobond payment of $800mn due to international creditors in February 2023 could therefore prove to be a challenge.

bne IntelliNews previously reported that if Belarus solves its Eurobond payments this year it could avoid a mounting debt and a downgraded credit rating across the board. With this outstanding debt to the World Bank, nearly twice the size as the payment Belarus claimed to have made on its Eurobonds in August, Belarus does not seem able to avoid this problem.

Belarus’ Finance Ministry is instead far from only having to worry about its upcoming payment in February 2023 as its overdue payments to foreign debtors keeps on mounting.