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Press Release- Embassy of Belarus : 06 August 2020

July 31, 2020

ANALYSIS: Economic downturn in Belarus continues, authorities plan to prevent a year-end decline

Monthly overview of Belarus’ money-crediting & banking sector, Jan-Jun 2020

MINSK, Jul 31 – PrimePress Analysis. As the calendar gets closer to the presidential Election Day in Belarus, the authorities intensify their positive rhetoric. Despite the lack of reliable sources of growth and forecasts for the rapid recovery of the economies of Belarus’ main partners, the government confidently declares that the situation in the country’s economy is improving and that they are determined to prevent a year-on-year decline at the end of 2020.

In July, the Economy Ministry presented its vision of Belarus’ GDP dynamics until the end of the year and in 2021. On July 17, Economy Minister Alexander Chervyakov said that “industry is beginning to recover in terms of production and supply”, partly due to new contracts for potash fertilizer supplies to China and India, as well as the ending decline in oil refining. The minister noted that although the country’s GDP shrank by 1.7% year on year in Jan-Jun 2020, Belarus may close the year with a zero economic decline.

However, the main macroeconomic indicators, including the dynamics of GDP and inflation, do not look very optimistic so far.

Table 1. Key indicators of Belarus’ macroeconomic performance:

    Indicator

Real figures, Jan-Jun 2020, billion Belarusian rubles 

Jan-Jun 2020 on Jan-Jun 2019, %

Official forecast for  2020, %

GDP

66.298

minus 1.7%

+2.8% (+1.6% in H1)

Industrial output

52.948

minus 3.1%

+2.2% (+1% in H1)

Fixed capital investments

12.764

minus 1.2%

+4% (+1.7% in H1)

Inflation growth since early 2017, %

3.4

5.2*

5% at most (not more than 3.2% in June 2020 compared to the level of Dec 2019)

Foreign trade balance (goods and services), USD million

++682.6** (+3.1% of GDP)

+114.4*** (+0.5% of GDP)

+$650m or + 1% of GDP in 2020 (+$533.7m or +1.8% in H1)

Real disposable household incomes, year on year, %

+5.4**

+7.1***

annual forecast +2.4% (+1.3% in Q1)

* Jun 2020 on Jun 2019

** Jan-May 2020

*** Jan-May 2020

GDP growth remains negative

On July 23, Belarusian President Alexander Lukashenko held a meeting with the top managers responsible for economic development. Prime Minister Roman Golovchenko said during the meeting that “due to timely decisions taken by the country’s leadership, this year’s GDP decline has happened to be way less significant that in the neighbouring countries with much stronger economies”.

Golovchenko confirmed that “the government expects to meet the targets set by the head of state and at least maintain GDP flat year on year”.

The National Statistics Committee (Belstat) says the country’s GDP decreased by 1.7%year on year in H1 2020 to Br66.298bn, while the H1 forecast implies that the economy is supposed to expand by 1.6%.

Officials see agriculture as one of the drivers of economic recovery. Indeed, over six months, with a 1.6% decline in total value added, the value added in agriculture increased by 3.9%. According to the Ministry of Agriculture, exports of Belarusian agricultural products and food products in January-May 2020 increased by 4.4% year on year to $2.2 billion.

Also still in the “green” zone are the construction sector and the information and communication sector. Gross indicators on information and communication are determined by the High Technology Park and such telecommunication companies as Beltelecom, MTS and A1.

The value added in construction is increasing due to positive dynamics of construction and installation works (+5.5% by 2019). In 2020, the commissioning of new housing is growing – 1.774m sq m for 6 months, up 4.1% year on year.

Transport has been an apparent outsider in 2020. This happens for two reasons. Firstly, because of the coronavirus epidemic, passenger traffic has significantly decreased. Secondly, freight traffic has degraded due to a decrease in exports of oil products and potash fertilizers.

Among the modes of transportation with high traffic, the railroad transport suffered the most. The railway cargo turnover fell by 16.5% over the six months, while the volume of cargo transportation fell by 18.6%. Transit freight traffic by rail decreased by 38%, cargo turnover – by 26.2%.

The decrease of value added in the sector of commerce has been primarily due to its wholesale component. The main Belarusian goods sold wholesale are fertilizers, ferrous metals and their products, oil and oil products, engineering products.

In the first half of the year, the wholesale turnover decreased by 8.9% year on year. At the same time, the decline occurred despite low comparative benchmarks: in January-June 2019, wholesale sales fell by 3.4%. At that time, the economy was affected by the oil contamination incident at the Druzhba trunk pipeline.

Retail turnover in the first half of this year grew by 2.6%. This growth was shown at the expense of the first quarter results (+7.9% by 2019). In the second quarter, retail sales fell by 2.1%.

Gross value added in manufacturing declined by 3.2% in January-June 2020, while output fell by 3.3%. At the same time, the first signs of recovery appeared already in June: value added increased by 0.8% year on year, while production – by 0.7%. At the same time, the recovery of industrial production is accompanied by an increase in inventories. Thus, as of July 1, industrial warehouse stocks reached Br5.524bn, which is 13.8% higher than 12 months earlier.

Belstat says warehouse inventories of finished products accounted for 78.1% of the average monthly output (63.4% as of July 1, 2019), the worst ratio of warehouse inventories to production output since 2014.

Thus, the Belarusian industry continues operating in a crisis mode, while a small increase in output can be the result of the produce-to-stock policy of Belarusian enterprises.

Investment dynamics remain uncertain

The global economic crisis continues to have a negative impact on investment dynamics. Investors seek to secure their resources and are wary of high-risk markets, one of which is Belarus.

According to Belstat, Belarus’ fixed-capital investments decreased by 1.2% year on year in Jan-Jun 2020, to compare with 5% growth in Jan-Jun 2019.

The total volume of fixed-capital investments stood at Br12.764bn as of July 1, 2020. This includes construction and installation works (including equipment installation works), which totalled Br6.84bn, up 5.5% year on year. The expenditures for purchase of machinery and equipment made Br4.565bn, down 9%.

Thus, this year there is a decrease in investments in the active part of fixed assets that are directly involved in production (machinery, equipment, transport vehicles, etc.). This fact may indicate a decrease in the efficiency of investments in Belarus, since the increase in investments in buildings that produce nothing by themselves is unlikely to quickly pay back in the future.

As concerns the structure of sources of financing of investments in fixed assets, it is still possible to note the dominating share of companies’ own funds. In H1 2020 accounted for Br5.462bn, or 42.8% of the total volume of fixed-capital investments (41.6% in H1 2019). The year-on-year increase totalled 0.6% in comparable prices.

The second largest portion of investments was at the expense of the consolidated budget, despite the announced intentions of the authorities to considerably reduce the volume of state support. In H1 2020 they came at Br2.553bn, down 0.4% year on year. Their share in the total volume of investments slightly increased from 19.9% to 20%.

The third largest portion of fixed-capital investments was at the expense of bank credits (loans), which in H1 2020 increased by 7%, totalling Br1.735bn. At the same time, the share of this source in the total volume of investments made 13.6% as a result of January-June 2020 versus 12.5% a year ago.

With relaxed monetary policy and reduced of credit interest rates, the share of lending in the total investment volume will grow further in the second half of 2020. It should be kept in mind that Lukashenko personally demanded to soften not only the monetary policy, but also the approaches used banks to assess solvency of potential borrowers.

Year-on-year inflation accelerates in June

After May’s 0.1% deflation, consumer prices returned to the growth trajectory in June, adding 0.2% month on month. As a result, in year-on-year terms Belarus’ inflation climbed to 5.2%, which exceeds the ceiling for the current year.

Belstat says consumer prices in Belarus increased by 3.4% since early 2020. Food prices rose by 3.2% in Jan-Jun 2020 (up 0.4% month on month in June), while non-food products rose by 3% (down 0.2%). Tariffs on services rose by 4.2% (up 0.4% in June).

Inflation dynamics at the end of the six-month period deteriorated primarily due to accelerated growth in fruit and vegetable prices from May’s 11.5% in year-on-year terms to 21.5% in June this year. At the same time, the contribution of this indicator to the overall dynamics of consumer prices increased from 0.43 p.p. to 0.85 p.p.

June’s annual core inflation totalled 3.7% to compare with 3.9% in May 2020. Trend inflation in June slowed down to 3.1% against 3.4% in May this year. Administered prices and tariffs increased by 6.7% year on year, which corresponds to the level of the previous month.

However, the National Bank remains optimistic about fulfilling the forecast inflation rate by the end of the year.

Deputy Chairman of the National Bank of Belarus Sergey Kalechits said an interview published in the newspaper Respublika: “A significant disinflationary effect is felt from the weak external and internal demand. And it will remain so at least as long as the global economy and the domestic economy of Belarus can overcome the consequences of the coronavirus pandemic. Together, these factors speak in favour of slowing down price growth and make 5% inflation quite achievable by the end of 2020.”

At the same time, inflation risks in Belarus are growing due to the instability of the Belarusian ruble, administered wage growth, as well as active moves to relax the regulator’s monetary policy.

Authorities plan to increase GDP against all odds

The situation in the Belarusian economy in the second half of 2020 depends on the speed of recovery of demand in the neighbouring markets and primarily in the Russian market. However, the government expects that demand for Belarusian products in foreign markets will decrease by 2.7% in 2020. The authorities plan to compensate for this decline by increasing domestic demand (by 2.7%) by the end of the year, which will be achieved by increasing the state budget deficit and reducing credit interest rates.

This policy has already become noticeable in June, when the budget deficit rose sharply from Br69 million in January-May to Br1.8 billion in January-June. This year the Ministry of Finance can still cover the deficit at the expense of balances of surpluses of previous years, return of guarantees and new credits and loans. By 2021, budget reserves will be depleted. If they continue injecting money into the economy through a soft fiscal and monetary policy, it will create risks of uncontrolledly heating up the economy, which will lead to a new recession.

Belarus plans to introduce investment agreements with guaranteed buyback mechanism – Economy Ministry

MINSK, Jul 31 – PrimePress. Belarus plans to introduce a mechanism of special investment agreements providing for guaranteed purchase of a certain share of products, Economy Minister Alexander Chervyakov told an online conference on July 31.

“There is a growing global competition for investments. We continue to improve the national investment legislation. This concerns simplifying the conditions for investors to enter the Belarusian market, reducing costs during project implementation, minimizing risks and increasing protection of ownership rights. There are plans to introduce a mechanism of special investment agreements to guarantee the purchase of a certain share of products,” said Chervyakov.

In his words, the Belarusian authorities seek to create the most comfortable conditions for concluding contracts among other countries of the Eurasian Economic Union.

“Belarus has been working to conclude bilateral international treaties with Singapore, Hong Kong Turkey and China. The main emphasis is on investment protection in terms of additional guarantees of investors’ rights,” said Chervyakov. End

Belarus’ FDI to reach $1 billion in H1 2020 – Economy Ministry

MINSK, Jul 31 – PrimePress. Foreign direct investment in Belarus in the first half of 2020 will amount to $1 billion, Economy Minister Alexander Chervyakov told an online conference on July 31.

Chervyakov said that large investment projects with foreign capital are being implemented in accordance with the schedule.

“These are the construction of a mining and processing plant for the production of potash salt (Nezhynsky Mine, Luban District, Minsk Oblast, with a capacity of up to 2 million tonnes of potassium chloride per year – editor’s note), the construction of the Minsk Mir experimental multifunctional residential complex, the high-tech complex BNBC (JSC “Belarusian National Biotechnology Corporation, Pukhovichi District, Minsk Oblast – editor’s note) and many other objects.

According to Chervyakov, despite the problems with the implementation of investment projects associated with the arrival of foreign experts from other countries, the supply of imported equipment, attracting funding, “in general, investment activity remains at the level of last year”. End

Belarus may fulfil 5% inflation target in 2020 – NBB

MINSK, Jul 31 – PrimePress. Inflation growth in Belarus is slowing down and may fulfil the 5% forecast, Deputy Chairman of the National Bank of Belarus Sergey Kalechits said in an interview.

Sergey Kalechits said an interview published in the newspaper Respublika: “A significant disinflationary effect is felt from the weak external and internal demand. And it will remain so at least as long as the global economy and the domestic economy of Belarus can overcome the consequences of the coronavirus pandemic. Together, these factors speak in favour of slowing down price growth and make 5% inflation quite achievable by the end of 2020.” End

Belarus’ foreign debt up 6.4% in Jun 2020 to $19.675bn

MINSK, Jul 31 – PrimePress. Belarus’ state foreign debt expanded by 6.4% month on month in Jun 2020 to U.S. $19.675 billion as of Jul 1, 2020 by the International Monetary Fund’s Special Data Dissemination Standards, reads a report posted on the website of the Finance Ministry.

The government’s long-term debt accounted for 91.25% of the total foreign debt in Jun 2020 (90.78% in May 2020), the government’s short-term debt for 0% (0%), and foreign loans to companies’ against the government’s security for 8.75% (9.22%).

The Finance Ministry says Belarus took out external public loans worth $1.818 billion in Jan-Jun 2020 and transferred $786.2 billion to redeem external liabilities.

In 2019, the foreign debt decreased by 1.4% to $18.502 billion as of Jan 1, 2020.

Belarus’ main creditors are Russia, China, the Eurasian Development Bank’s EFSD, the International Bank for Reconstruction and Development. End

Belarus’ internal debt down 0.57% in Jun 2020 to Br11.93bn

MINSK, Jul 31 – PrimePress. Belarus’ internal debt reduced by 0.57% on the month in Jun 2020 to 11.93 billion Belarusian rubles ($4.9 billion) as of Jul 1, 2020 by the International Monetary Fund’s Special Data Dissemination Standards, Belarus’ Finance Ministry said in a preliminary report.

Of the total internal state debt, the long-term debt of the government accounted for 78.03% in Jun 2020 (78.51% in May 2020), short-term debt for 0.0002% (0.0002%) and the debt secured by the government for 21.97% (21.49%).

Belarus’ internal debt reduced by 6.54% year on year in 2019 to Br11.11 billion ($4.6bn). End (Br2.4386)

EBRD eager to expand Br-credit financing in Belarus – Marina Petrov

MINSK, Jul 31 – PrimePress. The European Bank for Reconstruction and Development (EBRD) is interested in increasing project financing in Belarus, using credits denominated in the country’s domestic currency.

Head of the EBRD Office in Belarus Marina Petrov made a statement to this effect during an online conference on July 31.

Providing funds in Belarusian rubles has become a new form of EBRD operations in Belarus. “We have made several deals with Belarusian banks, where we were able to provide rubles. This is important for companies that are not exporters. We are now working with the National Bank of Belarus and the Development Bank of Belarus to increase funding in Belarusian rubles. The European Union is helping us here. It has provided financing to partially cover FX risks,” said Petrov.

The EBRD support, besides direct financing and through Belarusian banks, also includes consulting. “This year more than 50 Belarusian companies have received consulting services to improve business efficiency. We were able to respond quickly and present consultants to regroup and respond to the challenges,” she said.

In 2020, the EBRD’s shareholders decided to allocate two tranches of €4 billion to address the challenges posed by the COVID 19 coronavirus pandemic, with a new business volume of €6 billion in the region. “We helped clients solve short-term problems through refinancing, restructuring and obtaining financing to complete investment programs. Specifically in Belarus, we financed exclusively private businesses, banks and companies this year. The volume of new business amounted to €160 million – the largest amount allocated in the first half of the year in the history of the bank’s operations in Belarus,” said Petrov.

In her words, the second direction of the EBRD’s work is to solve the problems of trade financing, such as a crisis of confidence between clients and increasing delivery terms.

The European Bank for Reconstruction and Development is an international financial institution headquartered in London, created to support the economic transformations in Central and Eastern Europe. Since the start of its operations in Belarus in 1992, the EBRD has invested €2.917 billion in 134 projects in various sectors of the country’s economy. In 2016 the EBRD adopted a new strategy for operations in Belarus in 2016-2019. The document abolished the calibrated approach, which restricted EBRD operations with the public sector. Belarus and the EBRD have been implementing a number of projects in utilities industry, energy saving, transport infrastructure and environment protection. End

IFC ready to finance Belarus projects with focus on SMEs, healthcare

MINSK, Jul 31 – PrimePress. The International Finance Corporation (IFC) is ready to finance projects in Belarus to support small and medium-sized enterprises (SMEs) and the healthcare sector. Head of the IFC Office in Belarus Olga Shcherbina made a statement to this effect during an online conference on July 31.

“The IFC as a development institution cannot stand aside. The first two stages of the pandemic (COVID 19 – editor’s note) have been passed – entering the pandemic and its peak. Now we are in the recovery phase, when foundations for further growth and investment development are being laid. A lot of funds has been allocated to the IFC to support businesses. In Belarus, we focus on two priorities: to support existing businesses, which has been affected by the coronavirus, primarily small and medium. In July, the Board of Directors approved a $25 million project with Priorbank (Belarusian Priorbank OJSC – editor’s note) to provide financing for small and medium-sized businesses under working capital, for refinancing or structuring, so that businesses could keep jobs,” said Shcherbina.

The IFC second priority in Belarus is to create a basis for further development of business projects.

“For example, on July 29, the IFC Board of Directors approved a $4 billion global health program. It applies to new and existing clients. It is aimed at supporting healthcare projects related to the production of medical equipment, healthcare materials and we are ready to consider such projects to provide long-term investment financing from 7 years and above”, said Shcherbina.

The IFC – a sister organization of the World Bank and member of the World Bank Group—is the largest global development institution focused exclusively on the private sector in developing countries. The total amount of IFC funding in Belarus was $760 million in 60 projects. End

Belarusian banks, Development Bank restructure Br1.3bn debt on loans, bonds in 2020

MINSK, Jul 31 – PrimePress. Since early 2020 Belarusian banks and Belarus Development Bank have restructured debts on credits and bonds worth a total of Br1.3 billion ($537.634 million at the exchange rate of the National Bank of Belarus) within the framework of countercyclical measures taken by the National Bank to support the real sector of the economy under the negative influence of external factors.

Deputy Chairman of the National Bank of Belarus Sergey Kalechits made a statement to this effect in an interview published in the newspaper Respublika.

In his words, in March 2020, the National Bank adopted a package of prudential regulation measures aimed at more flexible approaches to lending to companies and individuals, as well as measures to increase banks’ motivation to facilitate debt restructuring, if necessary.

In Mar-Jun 2020, banks have taken 6,837 decisions to restructure credit debts the tune of Br1.3 billion. This includes 2,837,000 decisions on credit agreements of legal entities and individual entrepreneurs, and 4,000 decisions on credit agreements of individuals.

As previously reported, in March 2020, the National Bank took a number of countercyclical measures to encourage banks to provide financial support to the real sector amid the negative impact of external factors. In particular, certain prudential requirements were eased until December 31, 2020. In classifying assets subject to credit risk and forming special reserves, the banks are granted the right not to take into account the criterion of sufficiency of foreign exchange earnings with the debtor. In addition, the National Bank recommended banks to consider the possibility of granting credit holidays for legal entities and households – deferral of loan repayment (repayment) and payment of interest for its use. At the same time, it was recommended to extend the term of credit repayment. End

The NBB official admits that some enterprises are overburdened with credits, which is a problem for the whole real sector. However, the National Bank’s flexible approach to debt restructuring mitigates this problem. The NBB deputy chief points out that loans should not be the only source of financing for enterprises, but other financial instruments should be used more actively.

“In early 2020, the share of non-performing loans (NPL) was slightly below 5%. Due to the deterioration of external economic conditions amid the coronavirus pandemic, revenues and profits of business entities fell, which affected the ability of enterprises to service their debt obligations. This resulted in a slight increase in the share of NPLs. “Currently, the share of NPLs is around 5%, remaining within an acceptable range,” Kalechits said. He reckons that the NPL share may increase slightly if the economic situation should deteriorate due to external factors. End

Friday forex session: ruble up 0.05% against dollar to Br2.4375/$1

MINSK, Jul 31 – PrimePress. Following the bidding at the single forex session of the Belarusian Currency and Stock Exchange (BCSE) in the format of a continuous two-way auction, the Belarusian ruble stood at Br2.4375/$1 to the dollar on July 31, up 0.05% on the previous day of trading, says the BCSE official report.

Following the bidding at the single forex session on Friday, the ruble stood at Br2.899/€1 to the euro, down 1.15%; at Br3.3156/RUB100 to the Russian ruble, up 0.21%.

As previously reported, the National Bank of Belarus (NBB) on June 1, 2015 stopped the practice of fixing the exchange rate of the Belarusian ruble to the basket of foreign currencies on a day-to-day basis and switched over to FX trading on the Belarusian Currency and Stock Exchange (BCSE) in the format of a continuous two-way auction.

The parties taking part in continuous two-way auctions at the BCSE are free to make bids and offers during the entire auction period, however deals will be made if the FX trading system bridges bids with relevant offers.

The weighted average rate of the US dollar, the euro and the Russian ruble shall be the National Bank’s official exchange rate of the relevant currency for the day that follows the day of trading.

At the moment, the exchange rate of the Belarusian ruble is pegged to the basket of foreign currencies, with the share of the Russian ruble standing at 50%, the US dollar – 30%, the euro – 20%. End

COVID-19 pandemic takes toll on investment activity in Great Stone Industrial Park

MINSK, Jul 31 – PrimePress. The COVID-19 coronavirus pandemic had a significant impact on the investment activity of potential investors in the Chinese-Belarusian Industrial Park Great Stone (Minsk Oblast). Deputy Director General at Great Stone Industrial Park Development Company Sergey Vaitekhovski made a statement to this effect during an online conference on July 31.

“The pandemic has had a significant impact, primarily on the investment activity of potential investors – the closure of borders has greatly contributed to this. In January 2020, 30 companies were making real plans to invest in the park this year, many of them put their projects on hold. Since the beginning of the year, eight companies have been registered as park residents, if seven more join the ranks before the end of the year, it will be a very good result,” said Vaitekhovsky.

He said that the pandemic made it difficult to promote the park itself: while in 2019 the park was visited by 497 delegations of several thousand people, this year the intensity of contacts has decreased by five times. This activity had to be compensated by holding online events for different regions.

“In January-July 2020, we have concluded more deals year-on-year on the lease of industrial premises and the lease of land plots – we have increased by 4.5 thousand metres and 4.5 hectares of leased land plots,” said Vaitekhovsky.

He said that residents are seeing a downward trend in demand for finished products, raw materials and supplies are becoming more difficult to purchase, the delivery time of components has doubled, and labour safety costs have increased.

“Advanced companies have started to develop new types of products, first of all medical products – high-grade protective masks, bacterial and virus filters, plastic protective helmet masks. Investors’ preferences have changed: previously they were in the field of mechanical engineering, now it is directed to projects for the production of medical devices: four companies from China, the Czech Republic, Belarus and Russia have come to implement projects in these industries,” said Vaitekhovsky.

He added that production of various remote control systems for medicine as well as electric transport have become popular areas for park residents. The Great Stone is already assembling supercapacitors for electric buses and has begun manufacturing electric buses.

The China-Belarus Great Stone Industrial Park is located in the vicinity of Minsk National Airport on the area of 112.5 sq. km.

The special privileged legal regime of the park is valid until 2062. The Great Stone Industrial Park stakes on the development of electronics, biomedicine, fine chemistry, engineering. The declared amount of investment for residents is at least $5 million (at least $500,000 in the case of a research project or if the project is implemented within the first three years). The land in the park can be sold and owned as private property. Companies from 15 countries with more than US $1 billion in declared investments are registered as park residents. End

Belarus registers 67,808 coronavirus cases as of Jul 31, 559 dead

MINSK, Jul 31 – PrimePress. Belarus registered 67,808 coronavirus cases as of July 31, 2020, 559 people died, the Health Ministry of Belarus reports on its official Telegram channel.

62,444 patients, who were previously diagnosed with the COVID-19 infection, have recovered and have been discharged from hospitals.

Yesterday, the ministry reported about 67,665 registered coronavirus cases and 553 coronavirus-related deaths in Belarus.

The Health Ministry reports almost 1.3 million tests for the coronavirus infection as of July 31, 2020. End

NBB’s currency rates as of Aug 3, 2020

MINSK, Jul 31 – PrimePress. The National Bank of Belarus (NBB) set on Jul 31 the following exchange rates of the Belarusian ruble (Br) against foreign currencies for Aug 3, 2020.

 

Currency

 

Br

1

AUSTRALIAN DOLLAR

AUD

1.7531

1

BULGARIAN LEV

BGN

1.4778

100

UKRANIAN HRYVNA

UAH

8.7965

10

DANISH KRONE

DKK

3.8826

1

U.S. DOLLAR

USD

2.4375

1

EURO

EUR

2.8990

10

POLISH ZŁOTY

PLN

6.5615

10,0000

IRANIAN RIAL

IRR

5.8036

100

ICELAND KRONA

ISK

1.8108

100

JAPANESE YEN

JPY

2.3291

1

CANADIAN DOLLAR

CAD

1.8158

10

CHINESE YUAN

CNY

3.4959

1

KUWAITI DINAR

KWD

7.9798

10

Moldovan Leu

MDL

1.4670

1

New Zealand Dollar

NZD

1.6292

10

NORWEGIAN KRONE

NOK

2.6867

100

RUSSIAN RUBLE

RUB

3.3156

1

SDR (Special Drawing Rights)

XDR

3.4297

1

SINGAPORE DOLLAR

SGD

1.7767

100

KIRGHIZ SOM

KGS

3.1746

1,000

KAZAKH TENGE

KZT

5.7791

10

TURKISH LIRAS

TRY

3.4937

1

BRITISH POUND STERLING

GBP

3.2019

100

CZECH KORUNA

CZK

11.0452

10

SWEDISH KRONA

SEK

2.8084

1

SWISS FRANK

CHF

2.6854

July 30, 2020

Belarus reports Br1.776bn budget deficit in Jan-Jun 2020

MINSK, Jul 30 – PrimePress. Belarus’ Finance Ministry posted a republican budget deficit of 1.776 billion Belarusian rubles (Br) (U.S. $734.5 million at the official rate of the National Bank of Belarus), or 2.7% of the country’s GDP in January-June 2020, the Finance Ministry said in a release.

The republican budget indicates spending and revenues of the central administration, whereas the consolidated budget also includes local budgets.

Republican budget revenues reached Br10.319 billion ($4.3 billion), 41% of the annual target for 2020; expenditures – Br12.095bn ($5bn), or 44.3% of the annual target.

Revenues of the state administration budget (republican budget, local budgets and Welfare Ministry’s social security fund (SSF), Telecom Ministry’s universal service fund, civil aviation fund) totalled Br24.221 billion in Jan-Jun 2020 ($10 billion), 45.8% of the annual plan; expenditures – Br26.36 billion ($10.9 billion, 47.5%), deficit – Br2.139 billion ($884.6 million), or 3.2% of GDP in Jan-Jun 2020.

Revenues from the value-added tax amounted to Br5.96 billion ($2.5 billion, 48.6% of the year target), from the profit tax – Br772.1 million ($319.3 million, 18.8%), excises – Br1.414 billion ($584.8 million, 47.1%), from foreign economic activities – Br1.511 billion ($624.9 million), 31.6% of the annual target.

Revenues of the Labour and Welfare Ministry’s social security fund in Jan-Jun 2020 stood at Br8.468 billion ($3.502 billion, 49.2%), expenditures – Br8.377bn ($3.464bn, 49.4%), surplus – Br91 million ($37.6m).

Tax arrears stood at Br129.6 million ($53.6m) as of July 1, 2020.

As previously reported, the republican budget surplus in 2019 totalled Br3.229 billion ($1.335bn), 2.5% of GDP. Revenues – Br24.315 billion ($10.1bn), expenditures – Br21.087 billion ($8.7bn). Revenues of the central administration in 2019 amounted to Br53.985 billion ($22.5bn); expenditures – Br50.501 billion ($21bn); surplus – Br3.485 billion ($1.45bn), or 2.6% of GDP. End (Br2.418/$1)

National Bank: Current macroeconomic situation stable enough to relax monetary policy

MINSK, Jul 30 – PrimePress. The National Bank of Belarus (NBB) may allow easing the monetary policy easing in the current situation of macroeconomic stability. At the same time, even amid external shocks caused by the coronavirus pandemic, there are no preconditions for the country to re-live the 2011 and 2014 crisis scenarios.

Deputy Chairman of the National Bank of Belarus Sergey Kalechits made a statement to this effect in an interview published in the newspaper Respublika.

According to Kalechits, the transition to monetary targeting and flexible exchange rate formation in the monetary policy pursued by the National Bank and the government since 2015 have largely ensured price stability and macroeconomic balance. “Thus, a certain buffer of macroeconomic stability has been created, which today allows relaxing the policy without violating the stability achieved,” he said.

According to Kalechits, this opportunity reflects the dynamics of monetary indicators, which generally correspond to the forecast parameters and macroeconomic situation. “The year-on-year growth of the average broad money supply is 15.1%, without taking into account the change in the exchange rate of the Belarusian ruble – 6.3%,” he said.

At the same time, in his view, easing the monetary policy in the current situation is a justified measure and does not contain the prerequisites for the 2011 and 2014 crisis scenarios.

As previously reported, the possibility of easing monetary policy has been discussed twice recently at the meetings held by Belarus President Alexander Lukashenko with the management of the National Bank.

On June 19, the need for such a step was justified by the situational motivation at the meeting on measures to support the real sector. In particular, Lukashenko demanded to use all instruments to replenish the resource base of banks: deposit auctions of the Ministry of Finance, weakening the reserve requirements of the National Bank to maintain liquidity, as well as the profit of the banking system. The replenished resource base, according to the president, should be used as credit support to the real sector.

On July 20, as part of the procedure to appoint new members of the NBB Board, President Lukashenko met up with the senior management of the National Bank to discuss long-term investment planning with the mobilization of domestic resources, which implied adjusting the monetary policy.

In particular, Lukashenko noted that investments will be declared a priority for the next five-year period (2021-2025). In this regard, he urged the National Bank to look for new ways of attracting cheap long-term credits, which is necessary to finance investment projects with a payback period of 7-10 years.

Lukashenko also said that he had set a task for the government to get the economy growing at an average global GDP rate as early as 2021, as well as to prevent economic decline in 2020. He believes it is necessary to use “any opportunity to move forward”, and expects from the National Bank “more active participation in this process”.

As previously reported, Belarus’ GDP decreased by 1.7% year on year in January-June 2020 to Br66.3 billion ($27.419 billion at the rate of National Bank of Belarus). In 2019, Belarus’ GDP rose by 1.2% to Br131.952 billion ($54.570 billion; $1 – Br2.418), while the official forecast provided for 4% growth. End

Belarusian banks, Development Bank restructure Br1.3bn debt on loans, bonds in 2020

MINSK, Jul 30 – PrimePress. Since early 2020 Belarusian banks and Belarus Development Bank have restructured debts on credits and bonds worth a total of Br1.3 billion ($537.634 million at the exchange rate of the National Bank of Belarus) within the framework of countercyclical measures taken by the National Bank to support the real sector of the economy under the negative influence of external factors.

Deputy Chairman of the National Bank of Belarus Sergey Kalechits made a statement to this effect in an interview published in the newspaper Respublika.

In his words, in March 2020, the National Bank adopted a package of prudential regulation measures aimed at more flexible approaches to lending to companies and individuals, as well as measures to increase banks’ motivation to facilitate debt restructuring, if necessary.

At the moment, banks have taken 6,837 decisions to restructure credit debts the tune of Br1.3 billion. This includes 2,837,000 decisions on credit agreements of legal entities and individual entrepreneurs, and 4,000 decisions on credit agreements of individuals.

As previously reported, in March 2020, the National Bank took a number of countercyclical measures to encourage banks to provide financial support to the real sector amid the negative impact of external factors. In particular, certain prudential requirements were eased until December 31, 2020. In classifying assets subject to credit risk and forming special reserves, the banks are granted the right not to take into account the criterion of sufficiency of foreign exchange earnings with the debtor. In addition, the National Bank recommended banks to consider the possibility of granting credit holidays for legal entities and households – deferral of loan repayment (repayment) and payment of interest for its use. At the same time, it was recommended to extend the term of credit repayment. End

Thursday forex session: ruble down 0.85% against dollar to Br2.4386/$1

MINSK, Jul 30 – PrimePress. Following the bidding at the single forex session of the Belarusian Currency and Stock Exchange (BCSE) in the format of a continuous two-way auction, the Belarusian ruble stood at Br2.4386/$1 to the dollar on July 30, down 0.85% on the previous day of trading, says the BCSE official report.

Following the bidding at the single forex session on Thursday, the ruble stood at Br2.8660/€1 to the euro, down 0.87%; at Br3.3226/RUB100 to the Russian ruble, up 0.71%.

As previously reported, the National Bank of Belarus (NBB) on June 1, 2015 stopped the practice of fixing the exchange rate of the Belarusian ruble to the basket of foreign currencies on a day-to-day basis and switched over to FX trading on the Belarusian Currency and Stock Exchange (BCSE) in the format of a continuous two-way auction.

The parties taking part in continuous two-way auctions at the BCSE are free to make bids and offers during the entire auction period, however deals will be made if the FX trading system bridges bids with relevant offers.

The weighted average rate of the US dollar, the euro and the Russian ruble shall be the National Bank’s official exchange rate of the relevant currency for the day that follows the day of trading.

At the moment, the exchange rate of the Belarusian ruble is pegged to the basket of foreign currencies, with the share of the Russian ruble standing at 50%, the US dollar – 30%, the euro – 20%. End

Great Stone Industrial Park, Kolos Ventures Investment Fund to support high-tech startup projects

MINSK, Jul 30 – PrimePress. The Development Company of the China-Belarus Great Stone Industrial Park and the Kolos Ventures Investment Fund LLC (Minsk) have signed a memorandum of cooperation, which provides for interaction of the parties in finding, selecting and investing in potentially promising startup projects, the press service of the China-Belarus Great Stone Industrial Park said in a statement.

The China-Belarus Great Stone Industrial Park is located in the vicinity of Minsk National Airport on the area of 112.5 sq. km.

The special privileged legal regime of the park is valid until 2062. The Great Stone Industrial Park stakes on the development of electronics, biomedicine, fine chemistry, engineering. The declared amount of investment for residents is at least $5 million (at least $500,000 in the case of a research project or if the project is implemented within the first three years). The land in the park can be sold and owned as private property. Companies from 15 countries with more than US $1 billion in declared investments are registered as park residents. End

life:) starts selling SIM-cards with self-registration functionality

MINSK, Jul 30 – PrimePress. Belarus’ mobile operator life:) (ZAO BeST) says it is facilitating a commercial launch of the service that allows remote connection of new subscribers to the company.

The service makes it possible for an individual to purchase a SIM-card from the operator’s partners and register it independently through a mobile application. The digital solution was developed by lifetech (80% of the company is owned by Turkcell Group). The new service allows for subscriber identification through the application, based on biometric technologies.

SIM-cards are available with the pre-installed Shake Mini tariff plan of Br5 per month. This amount will be instantly credited to the subscriber’s account. The tariff includes 300 minutes of voice calls to all networks and unlimited Internet access. The customer can activate their SIM card independently using the mobile application life:) Registration. After activation, the subscriber can change the tariff to any other tariff.

BeST was registered on November 5, 2004. At present Turkcell owns 80% of the shares while the Belarusian Information Technologies and Communications Ministry owns 20%. BeST took out a license to provide communication services in Belarus on March 24, 2005. The trade name life:) was introduced on December 3, 2008. life:) launched 3G services in Belarus on November 2, 2009; LTE services in August 2016. The operator’s subscriber base counts 1.1 million active users. End

Naftan launches $130m sulphur facility

MINSK, Jul 30 – PrimePress. Belarus’ OAO Naftan oil refinery (Novopolotsk, Vitebsk Oblast) has launched a unit for producing elementary sulphur with an investment value of about $130 million as part of the construction of a slow coking facility. On July 30, the first lot of technical sulfur was received at the new technological facility, reads an article published in the corporate journal Vestnik Naftana.

With the new sulphur plant up and running, Naftan will reduce atmospheric emission of pollutants by 14 thousand tonnes per year, and actual emissions of sulfur dioxide will be reduced by more than 40%.

In addition, once the plant reaches its designed capacity, Naftan will provide import substitution of elementary sulphur for the Gomel Chemical Plant and Grodno Azot, which they use to produce fertilizers, caprolactam and sulphuric acid. It is also planned to export sulphur to Lithuania and Ukraine.

The elementary sulphur production unit will operate as part of the slow coking facility and dispose of hydrogen sulphide coming from other Naftan facilities. Each of the two sections of the plant is designed for utilization of 3 thousand cubic metres of hydrogen sulfide per hour. The plant will produce 103 tonnes of technical sulfur per day.

The construction of a slow coking facility with a capacity of 1.6m tonnes per year is Naftan’s major upgrade project with a total investment of $1.6bn. As a result of the upgrade, Naftan will be able to process up to 12m tonnes of oil per year, the oil conversion ratio will increase to 90%, and the yield of light oil products will be at least 70%.

Launched in 1963, Naftan is Belarus’ largest refinery and one of the largest in Europe. In 2008 Naftan incorporated another Belarusian refinery Polimir.

Naftan produces euro-4 and euro-5 diesel fuel, petrol and lubricants, which are exported to the EU, the Middle East and the United States. End

Naftan to perform scheduled repair works in Aug-Sep

MINSK, Jul 30 – PrimePress. Belarus’ OAO Naftan oil refinery (Novopolotsk, Vitebsk Oblast) will perform scheduled overhaul of technological facilities in August-September 2020. During this period the volume of oil processing will be reduced to the “optimal level”, which will allow to continue shipment of contracted products.

During the overhaul, they will perform routine maintenance, revision and repair of equipment, as well as “several new units will be put into operation,” Naftan’s management told PrimePress.

It is expected that the repair work will be completed in mid-September.

As previously reported, in recent years, Belarus has been performing scheduled repair works at Belarus’ oil refineries in accordance with a certain schedule: in late summer and early autumn, some facilities of Mozyr Oil Refinery (Gomel Oblast) were shut down, followed by Naftan. In 2020 it was decided to alter the schedule to avoid simultaneously suspending the operation the refineries. Thus, the Mozyr Refinery performed these works in May-June.

This decision was due to the need to compensate for the drop in physical volumes of oil products exports in the second half of the year in January-March 2020, when refineries were operating at 50% of their workload due to the lack of long-term contracts for oil supply with traditional Russian suppliers. As a result, in Jan-Mar 2020 Naftan and Mozyr refineries processed about 2.9m tonnes of oil instead of the planned 5.9m tonnes. End

Belarus’ electricity export down 45.8% in Jan-May 2020 to 409.7m kWh

MINSK, Jul 30 – PrimePress. Belarus’ electric power export reduced by 45.8% year on year in Jan-May 2020 409.7 million kWh, according to the official statistics.

In monetary terms, Belarus’ electricity export fell by 47.4% year on year in Jan-May 2020 to $20.547 million.

The decline in electricity export, both in physical and monetary terms, reflects the price situation in the market as well as falling demand in global and cross-border energy markets against the background of the COVID-19 pandemic.

Belarus exports electricity to the Lithuanian sector of the Nord Pool Spot Electricity Exchange, abiding by the rules for electricity trade in the Baltic States, according to which electricity can be supplied from third countries (including Russia and Belarus) in the day-ahead mode without long-term contracts. Therefore, the volume of Belarus’ electricity export is primarily determined by electricity prices in Belarus and in the Baltic States.

As previously reported, in 2019, Belarus exported 2.370 billion kWh of electric energy (up 127% from 2018) worth $123.563 million (up 126% year on year). The average export price of Belarusian electric energy decreased in 2019 by 0.8% year on year to $52.129 per 1,000 kWh. End

Miory Rolled Metal Plant plans to develop tin-plated steel via BUCE

MINSK, Jul 30 – PrimePress. Miory Rolled Metal Plant Ltd (ММРZ, Vitebsk Oblast) plans to promote exports of tin-plated steel via instruments provided by the Belarusian Universal Commodity Exchange (BUCE). ММРZ and BUCE have made an agreement to this effect following the metal maker’s visit to the BUCE office on July 29.

As previously reported, ММРZ plans to launch the first technological unit – cold rolling mill – in Q3 2020. The plant has completed the mechanical installation of three more units of processing equipment, and the final stage of installation of the fifth unit. After their launch, the plant will start full-scale operation. The metal company’s capacity will be 150,000 tonnes with a possibility to expand to  240,000 tonnes per year.

Miory Rolled Metal Plant Ltd is being built on an area of about 40 hectares. The new plant will be the only manufacturer of tin-plated steel in Belarus. The company will also produce cold-rolled steel. The plant plans to export the bulk of its products. The volume of foreign investments in the project is €360 million euros. The project is financed at the expense of an interbank credit from Germany’s AKA Export Finance Bank, credits by Russia’s VTB Bank and Roseximabank, and also Belarusbank.

The main investor of MMPZ construction is MMRZ GmbH (Austria). The equipment and technologies were supplied by SMS Group GmbH (Germany). The general designer of the plant is MetPromStroi (Russia), the general contractor of the project is Minskpromstroi OJSC. End

MTZ plans to supply more than 300 tractors to Zimbabwe by late August

MINSK, Jul 30 – PrimePress. Minsk Tractor Plant (MTZ) resumed deliveries of machinery products to Zimbabwe in April 2020. To date, several lots of BELARUS-820 tractors (a total of 130 units) have already been shipped to the African country. By the end of August, the company plans to fulfill all obligations under the contract, by supplying another having 300 machines, the MTZ press service said in a statement.

The company specified that tractor shipments to Zimbabwe are carried out within the framework of European programs of economic assistance to African countries. Prior to that, deliveries were made occasionally and in small volumes. So far, the last shipment of BELARUS tractors to Zimbabwe was in 2008.

The company says it view Burkina Faso, Zambia and Nigeria are promising export destinations in Africa today.

Minsk Tractor Plant (MTZ) was founded in 1946. It is the largest tractor plant in the former USSR and one of the largest tractor-making enterprises in the world.

MTZ Production Association is one the world’s largest tractor producers. The company produces a large variety of tractors ranging in power from 9hp to 365hp. MTZ currently runs 20 tractor assembly projects in 12 states. End 

Belarus’ farm output up 3.7% yr in Jan-Jun 2020 to Br6.974bn 

MINSK, Jul 30 – PrimePress. Belarus’ farm output grew by 3.7% year on year in Jan-Jun 2020 to 6.974 billion Belarusian rubles ($2.884 billion at the official exchange rate), the National Statistics Committee (Belstat) said in a report.

Sales of fattened cattle and poultry increased by 6.2% on the year in Jan-Jun 2020 to 848,000 tonnes; milk sales grew 6.9% to 3.379 million tonnes, eggs – down 0.9% to 1.759 billion.

The value of accounts payable in the agricultural sector stood at Br8.938 billion ($3.696 billion) as of Jun 1, 2020, up 5.2% year on year. Overdue accounts payable totalled Br2.67 billion ($1.103 billion), down 1.1% against Jan 1, 2020.

Accounts receivable amounted to Br1.708 billion ($706.4 million) as of Jun 1, 2020, up 6.3% since early 2020. Overdue accounts receivable totalled Br463.1 million ($191.5 million), up 3.2%.

The share of loss-making agricultural companies as of Jun 1, 2020 accounted for 9.2% (121) of the total number to compare with 10.1% (133) as of Jun 1, 2019.

The total net profit earned by Belarus’ agricultural companies in Jan-May 2020 stood at Br469.4 million ($194.1m), up 2% year on year. End (Br2.418/$1)

IQOS tobacco heating system by Philip Morris presented in 57 markets

MINSK, Jul 30 – PrimePress. The IQOS tobacco heating system designed by Philip Morris has been introduced in 57 markets.

Ashok Rammohan, President for Affiliates in Russia and Belarus, Philip Morris International (PMI), mentioned this fact during the online presentation of the Sustainability Report of the PMI affiliated companies in Russia, held via Zoom on July 30.

Philip Morris says it has been moving towards a smokefree future since 2016, when a relevant vision was adopted. “Our goal is that by 2025, as many as possible adult smokers will have switched to safer products. Studies have found that the most harmful chemicals produced during burning (in cigarettes – editor’s note) are not nicotine. We invented IQOS, which heats tobacco rather than burns, and is now represented in 57 markets. It’s a good replacement for traditional cigarettes for those adult smokers who want to switch to safer products,” said Ashok Rammohan.

In 2019, more than 9.7 million adult smokers around the world switched to smokeless products by PMI, quitting cigarette smoking. The total number of IQOS users worldwide reached 13.6 million by the end of 2019 (+41.8% to 2018). In 2019, the volume of tobacco cigarette supplies increased by 44.2% to 59.7 billion units.

According to FMI calculations, by 2025 about 40 million smokers will replace cigarettes with the IQOS tobacco heating system developed by PMI.

Belarus registers 67,665 coronavirus cases as of Jul 30, 553 dead

MINSK, Jul 30 – PrimePress. Belarus registered 67,665 coronavirus cases as of July 30, 2020, 553 people died, the Health Ministry of Belarus reports on its official Telegram channel.

61,765 patients, who were previously diagnosed with the COVID-19 infection, have recovered and have been discharged from hospitals.

Yesterday, the ministry reported about 67,518 registered coronavirus cases and 548 coronavirus-related deaths in Belarus.

The Health Ministry reports over 1.288 million tests for the coronavirus infection as of July 29, 2020. End

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