STATE railway Belarusian Railways (BC) failed to make payment on schedule to meet corporate obligations in the form of bonds worth $US 70m, the Belarusian Ministry of Finance announced on August 7.
According to local analysts, the situation indicates that the financial crisis at BC, reportedly brewing for the last few years, has now reached a crisis point. "The default on bonds proves that the situation at BC is really very bad," says Andrey Makhovsky, an independent economic analyst.
Detailed information is hard to obtain due to the information blackout imposed by the Belarusian authorities. However, it is understood that BC has made a loss every year since 2022. Last year it made a net loss of $US 113m, compared with $US 29m the year before.
Makhovsky says that a combination of international sanctions and a drop in rail freight traffic, both related to the war in Ukraine, have resulted in substantial loss of revenue. In addition, the operator is being charged by Russian Railways (RZD) for moving transit freight from Belarus to Asia and Baltic ports.
"BC is losing income and employees. We know that there have been redundancies there," Makhovsky says.
In May, the Belarusian Railway Association, an independent opposition organisation formed to unite BC staff, reported that BC is planning to make around 30% of its staff redundant. With the current BC workforce estimated at 61,000, around 18,000 workers could lose their jobs. Government officials have so far not commented on the potential job losses.
Makhovsky believes that BC’s loan default is unlikely to result in any serious consequences for the operator, with capital likely to be replenished from the state budget. As most of the debt is held by the state, it is extremely unlikely that the operator will declare insolvency, he says.
"These bonds are effectively subsidies, and the main buyers were state banks,” he says. “It is quite possible that the banks could have already been compensated for the purchase of the bonds from the state budget.”
