Investors face a classic 'dictator dilemma' in Belarus - hold on to securities that benefit from the status quo in a brutal regime, or sell them and sever their ties - but which way they go may depend largely on Vladimir Putin's Russia.
LONDON - Investors face a classic ‘dictator dilemma’ in Belarus - hold on to securities that benefit from the status quo in a brutal regime, or sell them and sever their ties - but which way they go may depend largely on Vladimir Putin’s Russia.
The announcement has triggered days of widespread protests and brought threats of stringent Western sanctions. On Thursday, however, the pressure on Lukashenko appeared to intensify, and BlueBay’s veteran emerging market strategist Tim Ash wrote that the situation felt like Ukraine in 2014 at the time of its ‘Colour Revolution’.
Belarusian authorities released detained demonstrators on Friday after issuing a rare public apology in a bid to quell the protests, while European Union foreign ministers meet later on Friday to discuss possible new sanctions. Another major risk is that Lukashenko could throw in the towel and Russian President Vladimir Putin could pull his support and financial backing that remains in place despite worsening ties of late between the two leaders.
Even at current prices, $2.5 billion of upcoming bond payments could leave the government with little over $7 billion in hard currency reserves by the end of the year - only enough to cover its financing needs for around two months in a worst case scenario.
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