Macroeconomic Forecast Belarus

Belarusian foreign exchange reserves fell to US$3.00bn in May, from US$3.43bn in April. Total reserve holdings are now down 11.8% y-o-y, despite April's impressive 18.9% m-o-m increase. May's fall coincided with a lack of new external financial aid from the IMF and Russia, in contrast to April's influx. Going forward, we believe that Belarus's reserve holdings will remain under pressure, as the financial sector will continue to be a key source of risk. We forecast foreign exchange reserves (excluding gold) to total US$2.70bn by end-2009, giving only 1.1 month of import cover.

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