Q: Belarus is trying hard to attract foreign investors. Recent investment forums in London, New York and Warsaw are just a few examples of the initiatives that have resulted. What business opportunities are there in Belarus?
A: We inherited enormous industrial potential from the Soviet Union and have multiplied it. We have the most qualified labour force in the former USSR. Our regulatory framework is aligned with European standards and, according to the World Bank’s Doing Business ranking, in the past five years, Belarus has been one of the top five most active countries in reforming and improving legislation, and creating more favourable conditions for doing business.
We offer many systematic tax incentives for foreign investors and [we are also part of] the Eurasian Economic Union [between Armenia, Belarus, Kazakhstan and Russia], which is a market with a population of more than 175 million people.
Q. At the end of 2014, the National Bank of Belarus had to deal with a sharp drop in the value of the Belarusian ruble. How is this impacting the Development Bank of the Republic of Belarus's day-to-day operations, especially when it comes to exports?
In 2014, the situation in the global commodity and financial markets changed drastically. It affected economic conditions in many countries, including Belarus’s major trading partners – Russia and Kazakhstan. Namely, the sharp devaluation in the Russian ruble – during which time its rate remained unchanged against the Belarusian ruble – had a negative impact on the financial performance of Belarusian exporters.
In order to minimise such a negative external influence, the National Bank of Belarus, together with the government, took a number of macroeconomic measures, including devaluing the Belarusian ruble. This will have a positive impact on competitiveness, export potential and the cash flow of domestic manufacturers.
We at the Development Bank provide additional support of foreign trade transactions through the implementation of export financing programmes. In 2014, we signed 90% of all export financing deals provided by Belarusian banks. [The Development Bank’s] export credit portfolio increased almost nine-fold, making it possible for the bank to take up the leading positions in this market segment.
Q: How is the economic situation affecting the projects the Development Bank is financing?
A: First of all, approximately 90% of the bank’s projects are financed in the national currency, which poses no currency risks for the bank or its borrowers. Credits in foreign currency are granted for purchasing imported equipment, making payments to non-residents by means of tied foreign credit lines.
While assessing borrowers and their projects, the Development Bank considers the influence of risks, including currency risks, on the financial stability of the company. It goes without saying that a sharp and significant devaluation will impact the pace of the implementation of some projects, but we will deal with it case by case and try to find an acceptable solution.
On the whole, despite the fact that major prudential norms and regulations are not applied to the Development Bank, the bank has a risk management system that complies with international approaches and regulations. Taking into account specific features and the scope of the projects financed by the bank, we are very thorough in minimising and assessing both the bank’s own risks and our clients’ macroeconomic sustainability.