Thursday 28 March 2024 | 12:35

Belarus government injects money in agriculture to solve problems with payment arrears in economy

29.04.2016  |  Economy
Belarus government injects money in agriculture to solve problems with payment arrears in economy agro-new.ru

The government will provide bank guarantees and subsidize loan interest rates to pay for agricultural crop supply in 2016. Compared with 2015, such soft loans will be reduced by 20%.

Financial health of agricultural enterprises would not allow seizing the state support completely and soft loans would partially reduce overall arrears in the economy.

According to the Council of Ministers resolution No 291 of April 8th, 2016, the government will provide guarantees that loans, issued for a one-year period with a total worth BYR 4.1 trillion to some food processing companies to buy crops from agricultural enterprises, will be repaid, so as the food will be processed for the government needs in 2016. Ruble loans will be issued at discount rate + 3%, and the state will compensate the discount rate in full to enterprises from the state budget. If loans are issued in Russian rubles, taking into account the compensation, the loan rate for enterprises will not exceed 10.5%.

Such mechanism has been used each year in order to ensure spring field works, and that agricultural enterprises have the money to pay for machinery and spare parts, fuel and energy resources and fertilizers. Compared with 2015, the state will cut such subsidies by 20% in 2016 due to the restrictions on administrative lending to the economy and the lack of budgetary funds. Most agricultural enterprises receive soft loans from banks. In 2015, the average interest rate on such loans in national currency totalled 10.7% per annum and in foreign currency - 7% per annum, which is significantly lower than the average in the economy.

The state cannot stop supporting the agriculture. More than half of agricultural enterprises are unprofitable without the state support. In January-February 2016, agricultural enterprises reported net losses at BYR 533 billion. Agriculture is a chronic energy debtor and it has the largest amount of wage arrears in the country. Most agricultural organizations do not have own funds.

By providing financial support to agriculture, the state solves several problems. Agricultural enterprises will use borrowed funds to pay the overdue debt to the industry and energy, which would partially solve the problem with payment arrears in the economy.

Some funds will be used to pay wages, which would somewhat boost retail trade turnover in the regions. In addition, the state will guarantee a certain volume of crop production at a fixed price for its own needs, which will help to somewhat curb inflation and will provide the food industry with raw materials. Since the usual amount of the state aid will be reduced, some agricultural enterprises will undergo restructuring or will be placed under control of more efficient enterprises.

Using soft loans, the state is attempting to solve the non-payment problem in agriculture and connected economic sectors. Due to the reduced amount of the state aid, not all arrears in agriculture will be repaid, some enterprises are likely to be reorganised and subsequently transferred under the control of a more effective owner.

Solidarity with Belarus Information Office

Other news section «Economy»

Leanid Zaika: Minsk decided to beat the Kremlin by Iranian oil
Leanid Zaika: Minsk decided to beat the Kremlin by Iranian oil
There are no strategic goals behind the purchase of Iranian oil, believes economist Leanid Zaika.
Stanislau Bagdankevich: The living standard will continue to fall in 2017, and possibly in 2018
Stanislau Bagdankevich: The living standard will continue to fall in 2017, and possibly in 2018
In 2017, Belarus will have to pay about $ 5 billion debts, which may affect the level of welfare negatively.
Leu Margolin: Industry cannot rise from its knees
Leu Margolin: Industry cannot rise from its knees
Although 30 percent of Belarusian enterprises can still be revived through urgent structural reforms.
Stanislau Bagdankevich: Next year will be harsh
Stanislau Bagdankevich: Next year will be harsh
Stagnation will continue in 2017, the standard of living will not rise, and the banking system may experience a crisis.
Andrei Yeliseyeu: Russia cannot impose quotas on the Belarusian dairy products supply
Andrei Yeliseyeu: Russia cannot impose quotas on the Belarusian dairy products supply
Belarus has already agreed to reduce the level of state support to agricultural producers in the framework of the Eurasian agreements.  
Leu Margolin: It is impossible to bring back the 500 dollars salary
Leu Margolin: It is impossible to bring back the 500 dollars salary
The authorities will start pressuring businesses to make them raise salaries.
Uladzimir Kavalkin: Drop in income? Salaries are finally becoming adequate to the economy state
Uladzimir Kavalkin: Drop in income? Salaries are finally becoming adequate to the economy state
Income may drop even a little bit more, but it will not be anything dramatic - within a few percent, expert believes.
Leu Marholin: In 2017, the probability of economic growth is close to zero
Leu Marholin: In 2017, the probability of economic growth is close to zero
In 2016, Belarusian authorities were expecting growth, too. However, the economy is going down.
EBRD will prepare five state companies for privatization
EBRD will prepare five state companies for privatization
The Belarusian government has invited the European Bank for Reconstruction and Development (EBRD) to prepare five large state-owned companies for privatization.
 Leu Marholin: We are heading full speed to the new nineties
 Leu Marholin: We are heading full speed to the new nineties
Regression of the Belarusian economy combined with the inertness of the government will make us recall the worst years.  
Uladzimir Kavalkin: Statistics on unemployment and real unemployment are poles apart in Belarus
Uladzimir Kavalkin: Statistics on unemployment and real unemployment are poles apart in Belarus
Officially, the unemployment in our country is reducing – if judging by the number of registrations at the labor exchange; however, the number of jobs doesn’t increase in the economy.
Leanid Zaika: Decline in prices on gas should lead to the reduction in utility costs
Leanid Zaika: Decline in prices on gas should lead to the reduction in utility costs
In the situation of cheaper prices on gas Lukashenka's decree on non-cash housing subsidies looks weird.
Point of view: Defence industry in Belarus evolved from helpless to a weighty branch of economy
Point of view: Defence industry in Belarus evolved from helpless to a weighty branch of economy
Recently Belarus State Military Industrial Committee announced that in the first half of 2016 its enterprises earned a net profit of $80m, thus over-fulfilling the assigned export plans by a quarter.
Leu Marholin: It looks like the Belarusian PM has got a fortuneteller
Leu Marholin: It looks like the Belarusian PM has got a fortuneteller
The fall of the economy will continue in 2016; we should hardly expect growth in 2017.
Why with the success abroad, Belarus’ agriculture keeps failing at home?
Why with the success abroad, Belarus’ agriculture keeps failing at home?
Poor economic conditions in the countryside, restrictions, unfair competition, inefficiency of state-owned agricultural enterprises also contribute to this ‘success story’, writes Aliaksandr Filipau.
Viktar Marhelau: We killed consumer demand inside the country
Viktar Marhelau: We killed consumer demand inside the country
In the situation of everyone’s impoverishment administrative procedures are now being perceived painfully.
Opinion: The question of what role China can play in Belarusian development remains open
Opinion: The question of what role China can play in Belarusian development remains open
On 20 June Lukashenka met with vice-chair and president of the Chinese CITIC Group Corporation Wang Jiong; it seems especially important in light of Lukashenka’s planned visit to China in September.
Lukashenka: Only lazy people don
Lukashenka: Only lazy people don't earn well in Belarus
All the conditions for everyone to be able to earn a decent salary have been enabled in Belarus, however, it is necessary to make some effort to get the money, assumes the president.
Leanid Zlotnikau: The government knows what to do with the economy, but will do nothing
Leanid Zlotnikau: The government knows what to do with the economy, but will do nothing
Belarus is losing currency earnings – in the 6 months of 2016 the country earned 3 billion less than in the same period in 2015. Instead of removing the causes of the flop the state relies on magic.
Russia
Russia's Rosatom agreed to replace reactor vessel at Belarus NPP
State Corporation Rosatom has agreed to replace reactor vessel at the Astravets NPP in Belarus.
Gintautas Mažeikis: The relation of political field and arena in the framework of information war

In his report, philosopher Gintautas Mažeikis discusses several concepts that have been a part of the European social and philosophical thought for quite a time.

“It is our big joint work”

It is impossible to change life in cities just in three years (the timeline of the “Agenda 50” campaign implementation). But changing the structure of relationships in local communities is possible.

Shhh! Belarus Wants You to Think It’s Turning Over a New Leaf

Minsk’s muddled media clampdown could jeopardize warming of relations with the West.

Mikhail Matskevich: How to create a local agenda and make it a problem solving tool

To achieve changes, you need to be interested in them and stop pinning all hopes on the state.