Belarus looking for ways to repay bad debts of state-owned enterprises

Belarus looking for ways to repay bad debts of state-owned enterprises

Belarus' government and the National Bank offered new instruments for repaying bad debts. The relevant draft decree was discussed at the meeting with the President on December 19.

As Alexander Lukashenko noted, the state cannot afford to constantly shift the problems of enterprises and banks to the state budget, so the issue needs a systemic solution, and banks need to participate more actively in these processes.

Alexander Lukashenko, President of Belarus:
The level of accumulated credit debt in some organizations is great, and this does not allow some enterprises to work efficiently and develop. Among the reasons are shortcomings of the past years, miscalculations in business planning and expensive money in the banking system. In 2015 and 2016 alone, about ten decisions were taken on a number of enterprises and industries worth a total of $1.8 billion. Their debts were restructured, deferrals were granted and budgetary loans were issued. Back then the government promised that if we help our enterprises, it will be the last time. The government said these enterprises needed some impetus which would kick-start efficient work of these enterprises and allow them to eventually return debts.

Now it's time to return debts, to repay loans.

But again, there is a wave of proposals for another restructuring. The motivation is the same: moaning and crying. We cannot afford to constantly shift the problems of enterprises and banks to the budget. We need to systematically decide on this issue. More active participation of banks in these processes is needed. But the most active should be the one who took the money.

According to the new document, debtors can be exempted from paying off bad debts if the company has a difficult financial situation and no prospects for repaying the loan are on the cards.

Banks could also be involved to manage such business entities, that is, in fact, the debt could be exchanged for their shares.

In addition, the rights under the loan agreement will be sold at a discount, that is, it will be possible to accumulate all the organization's debts in one financial structure.

In order to avoid the unjustified transfer of state-owned enterprises to banks, special mechanisms have been developed: the Council of Ministers and local authorities will take part in decision-making. Changes will also affect the restructuring of arrears relating to payments to the budget.