Government searches for “loopholes” to keep unprofitable enterprises and sectors

Alexander Lukashenko’s Decree No 170 of 22 April 2011 has legalized the scheme of circumvention of the requirements set by the international donors to stop loans and state support to the economy via emission.

“From 1 April 2011 to 31 December 2012 banks are proposed to suspend repayment of principal loans by organizations authorized to make procurement of modern agricultural machinery and equipment for supplying it to agro-industrial organizations on long-term lease (leasing)…”, reads the text of the document.

Comment

In the past, during the autumn-spring period the agricultural works and other needs of enterprises and sectors were supported via the NBoB emission (soft loans, etc., often new loans were issued to pay off old debts), now, instead of printing new money, the scheme envisages prolongation of the repayment period for old debts.

The amount of accumulated agricultural debt in Belarus is huge (Br 1.6 trillion in 2008, Br 2.62 trillion in 2009, Br 3.2 trillion in 2010, i.e. a total of Br 7.3 trillion, or USD 2.4 billion at the official exchange rate). The amount of accumulated agricultural debt in Belarus is huge (Br 1.6 trillion in 2008, Br 2.62 trillion in 2009, Br 3.2 trillion in 2010, i.e. a total of Br 7.3 trillion, or USD 2.4 billion at the official exchange rate).As a result, regardless of some tightening of monetary policy and declarations of renunciation of the policy of state support to rural and other sectors (except for social projects), de facto, the Belarusian authorities are not ready to refuse support to the inefficient producers, primarily in the rural area.