Republic of Belarus
Belarus became a full member of Eurasian Development Bank in June 2010. Its contribution to the Bank’s capital is US $15 million.
Economic growth rates in Belarus remained negative. According to preliminary estimates by Belstat, Belarus’ GDP in January-November 2016 fell by 2.7% year-on-year. Outputs continued to shrink while domestic and foreign demand remained weak because of conservative monetary and fiscal policies. In terms of added value, the declining oil processing will continue to restrain industrial recovery until the end of 2016. However, after a decline in Q3 industrial growth rates restored and reached 5.1% on November 2015, the highest indicator over the recent two years. The main growth factors include positive developments in the production of potash fertilisers due to new contractual arrangements and certain growth in mechanical engineering ensured, in the first place, by the low comparative base of the previous year. Overall, in January-November 2016 the decrease in industrial output was 0.9% year-on-year (after a fall of 1.8% in January-August 2016). Construction and trade continued to decline in January-November 2016, with a year-on-year decrease of 16.2% and 7.2%, respectively. Agriculture recovered in January-November 2016 by 3.4% year-on-year, after a 2.2% decline in January-August 2016.
Inflation amounted to 10.6% year-on-year as at the end of 2016, while the National Bank’s target for 2016 was 12%. The main factors stabilising inflation included lower consumer activity and the relative stability of the national currency ensured by the country’s restrictive monetary and fiscal policies. At the same time, the recovery of the population’s demand for loans despite high real interest rates suggests that inflation expectations remain high.
In Q3 2016, the current account had a small surplus of US $223.4 billion while trade balance reached a record high of US $576.4 million. Improvements in the current account were ensured by the recovered supplies of potash fertilisers, improved export prices, increased exports beyond the CIS, as well as improved trade balance (if to exclude energy commodities and potassium) as a result of the growing investment and consumer exports, in particular to Russia. The current account deficit was US $1.6 billion, or 3.9% of GDP, in January-September 2016 (US $0.96 billion or 2.3 of GDP the year before).
Because of inflation and the need to ensure financial stability, the National Bank of Belarus decided to maintain its refinancing rate at 18% in Q4. With the structural surplus of liquidity in the banking sector and weak demand for loans, the average interest rate on one-day interbank loans in the national currency fell from 14.3% in September to 11% in November 2016. Nominal loan and deposit rates also went down.
The Belarusian government continues to maintain a surplus in its budget. In January-October 2016, the surplus was BYN 1.4 billion, or 1.6% of GDP. The factors that exerted pressure on the budget in the second half of 2016 included reduced customs duty collection from oil product exports associated with a decline in their production (due to a slide in crude oil supplies from Russia). The surplus was ensured by a reduction in fiscal expenditure. In 2016, it is planned to maintain the budget surplus to repay domestic and external liabilities.
EDB’s priorities in Belarus
EDB’s investment activities in Belarus in 2013-2017 included the following:
- The Bank will continue to support the State Innovation Development Programme for 2011-2015.
- The Bank will also continue to finance real sector enterprises with high export potential (transport and agricultural mechanical engineering, the chemical sector and food industry). It will also help to introduce lease products in order to promote Belarusian goods in the member states.
- EDB will continue to invest in the power sector, including network development, efficient generation and other projects that will help to reduce the country’s dependency on imported energy carriers and improve its energy efficiency.
- In addition, the Bank will support transport projects enhancing Belarus’ transit potential.
- It will also continue to finance the banking sector within its targeted programmes for SMEs as an institutional basis of the market economy.