POLITICAL RISK - EU Relationship Weakening

According to an EU diplomat, the bloc is strongly considering re-imposing visa restrictions on Belarusian President Alexander Lukashenko following from the disputed presidential election in December, in which police forces delivered a harsh crackdown on political protestors. The EU previously imposed visa restrictions back in 2006 in the aftermath of the last presidential election, only to rescind them in 2008 in order to help spur political reforms in the ex-Soviet country. This recent step backwards in relations could push Belarus towards developing a stronger political relationship with Russia, on which it relies for foreign financing and energy imports, at least in the short run.

Our short-term political risk rating remains at 62.5.

ECONOMIC RISK - International Bond Placed

Belarus issued a 7-year Eurobond worth US$800mn on January 19 in order to partly help fund the country's budget deficit. The bond was reportedly placed with a yield of 8.95% and forms part of the government's international financing plans, tabled back in 2009, which originally raised the potential for US$2bn in foreign borrowing. While Belarus could struggle to continue tapping international capital markets in the future as ties between the ex-Soviet nation and the West have ...


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